Tag Archives: Cuba


Repetitio est mater studiorum,” says the Latin proverb – repetition is the mother of all learning.

Lessons for this post:

  1. Know what you are doing.
  2. Avoid paying massive premiums over net asset values.

Below is CUBA, a closed-end fund investing in companies that invest in Cuba or will benefit by an increase in business with Cuba. Note the spike upward on the announcement that Obama would allow a prisoner exchange and take Cuba off the US’s terror list opening up the possibility of the end of the US embargo.

large CUBA

Now go: CUBA NAV Summary  (Click on the button, since exception on the right side of the page, to see the history of price vs. Net Asset Value (“NAV”). Note the results last time “investors”/speculators or the confused paid in excess of 50% to the underlying stocks. We can argue about the intrinsic values of the underlying stocks but not the prices–because price is what it is. Mr. Market has spoken.

Here we are todaysmall cuba

Go back and click on CUBA NAV Summary and view the one year summary. Note that the price reached a 70% premium to the NAV AFTER the news event of “improving” US/Cuba relations.   Upon hearing the news:

My first post on CUBA (CEF) SELL!  Can I predict? No, just common-sense.

Where is the efficient market? Perhaps the unavailability of shares to borrow hindered arbitrageurs who could buy the underlying stocks and short the closed-end fund (“CEF”), CUBA.  But to pay such a premium is almost a guaranteed loss unless sold to a greater fool who will pay an even more absurd premium. That is speculating not investing. What is business-like about paying a 70% premium after a news event?

A closed-end fund sells a fixed number of shares to investors. For example, let’s pretend we start a closed-end fund to buy stocks, called the BS Fund. We sell 10 shares at $10 each for $100 in capital, then we buy 1 share of Company X at $50 and 2 shares of Company Y for $25 (ignoring commissions and fees). The net asset value (NAV) is ($50 times 1 share) + ($25 times 2 shares) = $100.   The net asset value per share is also $10.  So the price per share of the CEF ($10) trades at no premium (0) to the NAV per share $100/10 shares.  Now an investor wants to sell 3 of his BS (CEF shares) to an investor who bids for them at $9.00 per share.  Unless, the underlying share prices of Company X and Y change, then the discount is now 10%.  We, as the management, must institute a decision to buy back shares of the BS fund to close the discount or investors increase their demand for the shares.

Carl Icahn got his start as a closed end fund arbitrageur, who would force the managements of the closed-ends funds that traded at large discounts to NAV, to buy-back their shares.

Setting aside the emotional impact of the news announcement, the prisoner exchange and Obama’s reducing of sanctions doesn’t change much.  By the way, if sanctions and embargos don’t work (I agree) as Obama claims then why the sanctions on Russia? If the Russians didn’t surrender during Stalingrad, what are the odds now? Color me cynical.

The US is ALREADY one of the top ten trading partners with Cuba. Of course, the embargo is a farce, kept in place for political purposes. Congress still has to vote to remove the embargo, but even without the embargo Cuba lacks the production of goods and services to trade. Why? Cubans lack the capital to produce because they lack the security of property rights and the rule of law to acquire capital. No Habeas Corpus, no freedom of speech, and no rights. No tyranny generates LONG-TERM economic growth.

What returns will foreign investors require to invest in Cuba?  Say you whip out your spread-sheet and suggest 25% annual returns to build a new hotel in Cuba based on your projection of American tourists hitting the shores of Cuba like locusts.  Two years after the hotel is built, Raul Castro and his military cronies tears up your contract. Investment lost.  Without the rule of law and sanctity of contract, the rest means little. The first lesson is to know what you are doing.

Life in Cuba:

  1. Tengo Hambre A Cuban Says I AM HUNGRY!
  2. Life for Cuban Youth (Cuba with highest suicide rates in the Western Hemisphere.

The investor who buys CUBA would have to understand what the current changes mean for the companies in the fund. Anyone who spends time understanding the current economic conditions there would grasp how little the current announcement means for investment there.  Ask the Canadian investor rotting in a Cuban jail today Canadian investor rots in Cuban jail.

Speculators were willing to pay at 70% premium AFTER the price of the underlying companies had moved higher by 10% to 15% on the news.  A premium on top of a premium–a lesson of what NOT to do.   Questions?

If anyone in this class does that, then this awaits: No Excuse

Hell Ship


They’re all stuck in the Caribbean, adrift.   No air-conditioning.  Power blackouts.  Short on running water.  Backed-up toilets.  Rotting and dwindling food supplies.  Abysmal medical care.  No control over circumstances, or over the stench and heat.

Can’t flee.  Complaining is useless.  And the media doesn’t care much about their plight.

Yeah.  Welcome to CUBA, suckers.  You thought you were on a Carnival cruise ship, but really ended up taking the only real people-to-people Cuban excursion available, even without docking there, or without having to deal with noisy Cubans.  You get to live like 99% of the Cuban population.  Congratulations.  It’s the experience of a lifetime, but you only have a few days till you are rescued.

Sorry about your plight.  Honestly.  But you should expect a big fat refund.   You are still protected by the free enterprise system and capitalist ethics.  Once you get off the ship, please think about 11 million Cubans who have been living your Carnival nightmare every day for 54 years without hope of rescue.  And without any hope of ever being reimbursed.

And you don’t have to put up with news reports that praise conditions on your ship, or with academics who analyze and laud it as one of the most successful ventures in human history.   And….  no t-shirts imprinted with the image of your co-captain will ever be sold all around the world. —Carlos Eire

My Travels with Cubans: A Glimpse of Cuba

Waiting for Fidel to Die


This Closed-End Fund (CUBA) represents companies that might benefit with a Cuban trade opening.  Today the CEF trades at a premium, so avoid as an investment.

But why the spike in 2007/2008 with the CEF trading at over a 25% premium to the underlying stocks–arbs where were you?  I guess people took joy in this :

Socialism Benefits dieters–empty shelves in Venezuela.

Empty Shelves


Value Vault Update; Approved for Transplant and Emerging Market Value Investing

Value Vault Update

Many have been having troubles opening the Value Vault. The main problem is the size of the folder; there is a 2 Gig limit. Splitting folders means multiple emailing of keys. I get 10 requests a day so time constraints make this a hassle.  Yes, there is Google, Dropbox and many other choices than Yousendit.com.

To make this blog more assessable for learning, I will post the videos up on this blog and the important books. All case studies, documents and more obscure books, I will place in a folder (less than 2 Gigs)  or two and then email out all the keys.

This blog will no longer have advertising on it. The videos will have the corresponding case studies and financials for ease of study.  Once that is up, you have about 10 valuation case studies with videos to develop your skills along with all the prior posts.

I have all your emails, so you won’t be forgotten when I email out the new keys. You will see the videos going up by tomorrow.

I have been finally approved as a kidney donor so I wait for the date of my surgery. More blood samples, CAT scans and X-rays have been taken of me than any lab rat. Ready to go so the recipient doesn’t have to suffer dialysis or death.


Quiz for emerging market value investors

Your company has been given a concession to open a resort on the North coast of Cuba. What recommendation would you make to your investment committee? What should your required rate of return be?

Poverty Amidst Splendor or Lessons in Tyranny. Alexander Roepers, Activist Investor

There is very little the privileged class has that everyone else doesn’t have, except money.–Alex Castro (son of Fidel Castro)

Tremeda Hambre! http://youtu.be/ssIv2c-u7R0  This Cuban interrupts an interview with a Cuban Reggae artist, yelling that he is hungry.  He represents life in Cuba for the majority.

Life in Cuba for the masses:http://www.therealcuba.com/Videos.htm. Grim.

Of course, for a dictator to impoverish his country to desperation while holding onto power, there must be a special few to keep him in power.

Splendor amidst poverty with Cuba’s Gilded Elite http://www.theatlantic.com/international/archive/2012/09/splendor-amid-poverty-gallery-nights-with-cubas-gilded-elite/261956/

To understand how to take and hold power, read Machievelli http://en.wikipedia.org/wiki/Niccol%C3%B2_Machiavelli and my recent favorite:

And for more detail, The dictator’s handbook and blog (Satire!): http://dictatorshandbook.net/

Lessons for investors

Why bother? Well, those lessons will illuminate why and how there are so few gifted CEOs but so many highly paid CEOs with miniscule tie to performance in corporate America (though the situation is better than in Japan). Packed, insider boards and benchmarking with diffuse, ignorant shareholders might be the some of the reasons.

Pay for Performance Puzzle: http://www.businessweek.com/investor/content/sep2009/pi20090923_783858.htm

Please be in touch if any of you become a tyrant in a small, hot country.

Alexander Roepers


Visit www.greenbackd.com for discounts to this year’s Value Investors Conference.

Pray for Cuba; A New Blog (Sanjay Bakshi Interview: Value Investing Made Simpler)

Since I have family and friends living in Cuba, please let me take this moment to send my prayers to them as Tropical Storm Gordon bears down.

Life for the young and most Cubans is brutal under the Crastro brothers’ tyranny. See what Cubans have to say:A Glimpse of Cuba.

Azucar Amargar (Bitter Sugar-Life in Cuba for the young). Watch the first five minutes even if you can’t understand Spanish. A young revolutionary slowly discovers the truth. http://youtu.be/tHPGhgrGq7s

Sanjay Bakshi, A Graham-like Investor in India


Follow the links for this four-part interview. Go to other links. Good stuff. I am  impressed with the curiosity and diligence of the Indian students and investors that I have been fortunate to meet over the years.

Here is the entire interview:Value-Investing-The-Sanjay-Bakshi-Way-Safal-Niveshak-Special

Reading and Viewing of Interest

Creative Video (3 minutes): You Will Love Stockholm http://bit.ly/GT6c4K

30-Day Reading List to becoming an educated Libertarian (Even if you don’t wish to be one, you will learn about common sense economics): http://thewhitedsepulchre.blogspot.com/2012/06/30-day-reading-list-that-will-lead-you.html

How The Austrian Business (Trade) Cycle Works or Why Don’t Entrepreneurs Stop Making the Same Cluster of Errors? These articles help answer my puzzlement over why booms and bust recur. Don’t people learn?ABCT and the cluster of errors     An IMPORTANT READ!

Pershing Square 1st Qtr. Letter:Pershing_Square_Q1_12_investor_letter

Volatility is the friend of the unleveraged long-term investor. We much prefer the bumpy road to higher rates of return then a smoother ride to more modest profits.

Canadian Pacific Railway Ltd. (CP), J.C. Penny Company, Inc. (JCP), Justice Holdings/Burger King and General Growth Properties (GGP) discussed.

Crony Capitalism at Work or why it costs $6 to go 1/2 mile in a NYC Cab.http://mjperry.blogspot.com/2012/06/taken-for-ride-by-nyc-taxi-cartel.html

Search for businesses

Top twenty franchises http://www.forbes.com/pictures/elld45le/intro/ Successful franchisers can be great businesses but their success depends upon the profitability of their franchisees.

Screening for bargains (Damodaran Blog)http://aswathdamodaran.blogspot.com/

Capital Allocation in a commodity business (Bronte Capital)http://brontecapital.blogspot.com/2012/06/how-business-decisions-are-made-in-boom.html   Thanks to a reader for bringing this article to my attention.

Volatility is your friend

Brandes Research Institute http://www.brandes.com/Institute/Pages/BIResearch.aspx

Imagine the unimaginable


What do Cubans Say?: A glimpse of Cuba Interviews taken by this blogger over the course of traveling for two months through Cuba.   I will never forget what two Cubans said to me, “We are sick of living in a pre-historic zoo.”

Media Bias and Cuba

This blog is not about politics per se, but about rational thinking. If you read the news, be aware of bias, especially your own.

All lies and jests, still a man hears what he wants to hear and disregards the rest. –Paul Simon

I wrote an article in 2005 after traveling down to Cuba: http://www.babalublog.com/archives/001341.html

After seeing several Cuban children being beaten by police, I asked a Cuban woman why there is so much repression in her country? She replied, “Nadie está escuchando.”  (Nobody is listening). Perhaps this article may shed more light on why.

Carlos M. N. Eire*   Jan. 17, 2012

Thugs take over your country. Much more quickly than you ever thought possible, one megalomaniac takes control, discards the constitution, abolishes free speech, takes over all of the news media, bans all sorts of books and films, closes down all private schools, expels most of the clergy, and abolishes all private enterprise and personal property. In the wink of an eye, he also seizes all the banks, wipes out all accounts and changes the currency so no one can have more than a week’s pay in their pocket.

In the meantime, as these changes are taking place, all who oppose the new regime are imprisoned, tortured, or executed. Some simply disappear. Spy houses are set up on each city block, to watch your every move, and these very same government agents are placed in charge of herding you to public demonstrations and telling you what to shout out. In addition to assigning you all sorts of “volunteer” tasks that amount to slave labor, these meddlers are also given control of your access to medical care, of your children’s placement in school, and of the ration cards that you need in order to survive.

Eventually, anyone suspected of being gay or too religious is rounded up and sent to concentration camps, where “experts” try to “cure” them of their “illness” through torture.

Should you murmur the slightest complaint or curb your enthusiasm, you will not only risk prison, but also imperil your family’s well-being.

Should you opt for exile, your neighbors suddenly “volunteer” to harass you constantly. You may also be forced to spend three or more years at a labor camp, working without pay, hundreds of miles from your home and family, before you are allowed to emigrate. When you finally do manage to leave, all of your remaining possessions are taken from you, including your family photos, your wedding ring, and the rosary or mezuzah your grandmother once gave you. After being strip-searched, you leave the country without a penny to your name, and only two changes of clothing in a very small bag. Suitcases are forbidden.

Or you may risk your life and flee in a flimsy raft under cover of darkness, knowing that there are many sentries patrolling the coast, with shoot-to-kill orders, and many sharks waiting to chew you up if your vessel sinks.

Then, imagine that once you get out, nearly everyone in your place of exile tells you that the totalitarian nightmare you have fled is a wonderful and praiseworthy experiment in social engineering, or even an egalitarian utopia. Imagine being scolded for disagreeing with such assessments. Imagine being told by many affluent and well-educated people that you are a selfish oaf who doesn’t give a damn about justice and can’t appreciate “visionary” leaders.

Welcome to Cuba, and also to the life of a Cuban exile.

Want to get a little deeper under this skin? Imagine this, if you can.

The megalomaniac and so-called visionary leader who has hijacked your country for five decades falls ill and appears to be near death. One of the finest newspapers in your adopted land goes out of its way to ask for your opinion, presumably because you have managed to become a well-respected scholar. But this journal, The New York Times, doesn’t really want you to speak your mind. No. Instead it wants you to pass judgment on your fellow exiles who are openly rejoicing in Miami. And they suggest the topic in the most offensive way you could ever imagine, with a remark as flippantly ignorant and insensitive as Marie Antoinette’s infamous “let them eat cake.”

“I can’t help but wonder if this rejoicing is appropriate,” says the Times editor about the street revelers in Little Havana, “since many of them were likely allowed to leave Cuba in the early 60’s with Castro’s blessing.” Then, as if this were not vexing enough, she asks you to lay all your cards on the table and state your position on this question explicitly, to see whether or not your opinion is worth considering. And when you comply and offer to sum up the ailing tyrant as the consummate Machiavellian prince, you are curtly dismissed…

“We’re afraid that this approach is not quite right,” said the editor.

Imagine that.

God knows what they were searching for at the New York Times, or what they expected of me. All I know is that the Times made me feel as if I were back in Cuba, dealing with its state-run propaganda rag, Granma. Or like a “negro” in the old South, dealing with segregationists who couldn’t understand why colored folk were so ungrateful about being rescued from Africa.

But that’s not all.

If it were only the New York Times, maybe all of us Cubans would be in better shape, in exile as well as on the island. But, unfortunately, it’s not just the Times that loves to idolize the Castroite Revolution. It’s most of the North American and West European media, and their glitterati. Or so it seems, most of the time.

When Fidel Castro visited New York in 1995 to give a speech at the United Nations, he was the toast of the town’s news oligarchs: Mort Zuckerman, then editor of U.S. News and World Report, hosted a lunch for the tyrant at his plush Manhattan apartment, where he and others such as Barbara Walters, queen of tear-jerking interviews, and Diane Sawyer, first prime-time anchorwoman of ABC News swooned in his presence, as if he were a rock star. (1) Barbara and Diane are in good company. Dan Rather, former anchorman of CBS news, called Fidel Castro “Cuba’s own Elvis.” (2) Imagine Hitler or Mussolini being compared to Elvis.

Imagine all of this happening to Idi Amin, Sadam Hussein, or Augusto Pinochet.

Imagine even worse.

If it were only the news media, then maybe we Cubans would stand a chance of redemption. But the American entertainment industry seems to love the tyrant and his henchmen too. Robert Redford glorifies Fidel’s sidekick Che Guevara on film in “The Motorcycle Diaries,” and since that is apparently insufficient, Steven Soderbergh follows suit with a six-hour epic hagiography that might as well have been entitled “Saint Che.” Director Oliver Stone praises Fidel as “one of the world’s wisest men.” (3) Actor Jack Nicholson calls him “a genius.” (4)

Supermodels Kate Moss and Naomi Campbell gush after meeting Fidel that this was “a dream come true.” (5) Not to be outdone, novelist Norman Mailer pronounces Fidel “the first and greatest hero to appear in the world since the Second World War.” (6) But in the end, no one could trump the French, those supreme arbiters of good taste. After all, long before Hollywood stars made pilgrimages to Havana existential philosopher Jean-Paul Sartre had already crowned Che, rather than Fidel, as “the most complete human being of the twentieth century.” (7)

No wonder we Cuban exiles are seen as the fiends and villains of our own story, and of American politics. No wonder we’re loathed by intellectuals and commoners alike. No wonder the Washington Post and scores of American newspapers can get away with publishing this cartoon with impunity.

Imagine any other immigrants or any ethnic group in that boat. Imagine the firestorm of protest that would ensue.

Imagine the charges of bigotry and racism leveled against the cartoonist and the newspapers who would print such an offensive cartoon.

One final meditation. Imagine this, if you can.

Imagine a New York Times or Washington Post that would dare to print this essay, or apologize for their abysmal ignorance and bigotry.



(1) Servando González, The secret Fidel Castro: deconstructing the symbol (InteliNet/InteliBooks, 2001), p. 35.

(2) “The Last Revolutionary”: interview of Fidel Castro by Dan Rather, CBS News, 18 July 1996.

(3) Myles Kantor, “Oliver Stone’s Cuban Lovefest,” www.frontpagemag.com, 5 May 2004.

(4) Army Archerd, “Nicholson, Castrow powwow in Cuba,” Variety, 15 July 1998. http://www.variety.com/article/VR1117478496?refCatId=2

(5) BBC News. News. http://news.bbc.co.uk/2/hi/americas/59225.stm

(6) Arnold Beichman, “Mona Charen Exposes Menace of Senseless Liberals,” Human Events, 17 February 2003.

(7) Frank Rosengarten, Urbane revolutionary: C.L.R. James and the struggle for a new society (University Press of Mississippi, 2008), p. 108.


*Carlos M. N. Eire is Professor of History and Religious Studies at Yale University and author of Waiting for Snow in Havana and Learning to Die in Miami. This article is based on a lecture he delivered at the Institute for Cuban & Cuban-American Studies, University of Miami, on November 21, 2011.


The CTP can be contacted at P.O. Box 248174, Coral Gables, Florida 33124-3010, Tel: 305-284-CUBA (2822), Fax: 305-284-4875, and by email at ctp.iccas@miami.edu. The CTP Website is accessible at http://ctp.iccas.miami.edu.