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'CUBA' is surging after Fidel Castro's death

A fund that trades under the ticker CUBA is seeing a remarkable spike after Fidel Castro’s death last week.

The Herzfeld Caribbean Basin Fund, Inc. (CUBA) was the first fund to invest specifically in companies exposed to and operating in the Caribbean region, including Cuba, Jamaica, the Bahamas, Dominican Republic, Mexico and Costa Rica. Shares of CUBA soared over 12% on Monday.

The fund has seen similar surges in recent years: Shares of CUBA spiked as much as 35% on Dec. 17, 2014, in response to President Barack Obama’s announcement that the US would begin to normalize relations with Cuba. Shares are up 8% this year and up 14.4% since going public in 1994.

Tom Herzfeld founded his Miami-based eponymous boutique investment management firm Thomas J. Herzfeld Advisors in 1984. The company’s Cuba division manages the publicly traded closed-end fund called The Herzfeld Caribbean Basin Fund, Inc.

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While there have been conflicting views about the future of US-Cuba relations, Herzfeld said Castro’s death ushers in a new era departing from the hostile and tense dynamic of the past. “Cuba is already different today than before his death and will continue to be different every day going forward. Every day now America and Cuba will be closer and closer,” Herzfeld told Yahoo Finance.

“I’m viewing this change very positively. By the time Mr. Trump is sworn in, we’ll have a clear view of the the Cuban government’s new policies,” he said.

This attitude is surprising, given the president-elect’s hardline stance and explicit threat to end the relationship entirely. He tweeted on Monday:

Though Herzfeld agrees with Trump that the new regime must make changes toward political freedom and democracy, and most importantly release the remaining US political prisoners in Cuban prisons, he said Castro’s death may be the tipping point for US-Cuba relations. He said he’s hopeful that the Cuban government will acquiesce to pressures from the international community to allow more economic and religious freedoms for its citizens.

It Trump were to cut ties with the island, there would be a massive reversal of the recent developments under Obama, who has loosened trade and travel restrictions as well as reopened embassies in both countries. Congress, however, has refused to lift the economic embargo entirely.

“There are still a lot of cracks with fully entering Cuba, but there are a significant amount of American companies — both public and private — that are doing business there,” he said.

Bullish on Cuba’s future

Having analyzed and done business with companies exposed to Cuba for four decades, Herzfeld said US-Cuba relations will only evolve from here. “I believe there is a massive opportunity that can’t be missed. We will transition to a more direct investment strategy for our clients once we’re permitted to do — I think that will be sooner rather than later,” Herzfeld said.

CUBA’s top holdings include construction company MasTec (MTZ), Royal Caribbean Cruises (RCL), homebuilder Lennar (LEN), Norwegian Cruise Lines (NCLH) and Latin American airline company Copa Holdings (CPA).

The fund is focused on infrastructure stocks because the entire country of Cuba “needs to be rebuilt and modernized,” Herzfeld said. Specifically citing companies like Watsco (WSO), the largest distributor of air conditioning in the US, and Cemex (CX), a Mexican multinational cement company, he’s looking at companies that will literally pave Cuba’s path forward.

The once-inaccessible Cuba is now a hot tourist destination, with 700,000 Americans having visited the island last year. And Herzfeld only sees the appetite growing from here.

“Tourism is the largest industry for Cuba, so rebuilding the country is important,” he said. “It’s a bright future for Cuba and its people and the economic sector will grow enormously. What’s past is past and we can’t change that. But we should all look toward the future. I anticipate rapid growth of Cuba’s middle class — both professional and blue collar workers — who will develop their own businesses.”

Many Cuban-Americans in his community in Miami are rejoicing at Castro’s death. He says many are looking to go back not just to visit and have a home there but also to engage in business. Herzfeld himself even has what he calls a reserve team “ready to spring into action,” comprised of advisors who had been consulting with him but could join full-time and on-the-ground in Cuba.

Despite the uncertainty looming over the fate of Cuba and the US, Herzfeld is steadfast in his bold assertion that the best is yet to come for the relationship (and his company). Herzfeld named his son, Erik, president of the company last year, but says he has no plans to retire as “things are getting more interesting around here.”

See also: What you need to know about traveling to Cuba after Castro’s death

Melody Hahm is a writer at Yahoo Finance, covering entrepreneurship, technology and real estate.

Follow her on Twitter @melodyhahm.