Following remarks from President Obama, companies with Cuban exposure and those without both saw massive gains Wednesday.
Speaking from the White House, Obama said that it his desire to begin normalized relations with the island nation after over 50 years.
“I believe we can do more to support the Cuban people and our values through engagement,” said Mr. Obama. “These 50 years have shown that isolation has not worked. It’s time for a new approach.”
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“We intend to create more opportunities for the American and Cuban people and begin a new chapter among the nations of the Americas,” the president said.
“Todos somos Americanos,” Obama quipped in halting Spanish. “Today America chooses to cut loose the shackles of the past, so as to reach for a better future for the Cuban people, for the American people, for our entire hemisphere and for the world.”
Following the announcement, shares of the Herzfeld Caribbean Basin Fund jumped over 35% to a seven-year high. The Herzfeld Caribbean Basin Fund has legitimate Cuban exposure. The same cannot be said for the Cuba Beverage Company that trades over-the-counter with the symbol CUBV. See the thing is, the Cuba Beverage Company has nothing to do with Cuba and is based in San Diego. The company had revenues of under $10,000 for the last reported quarter and produces all-natural juice beverage in the United States and internationally.
However, the apparent belief that the company could benefit from a removal of Cuban sanctions sent the stock soaring over double its opening price today. While the stock has traded between $0.01 and $0.09 over the last 52 weeks, the stocked doubled today picking up a gain of over 110% today presumably given the president’s announcement.
Cuba Beverage: Investor confusion
Cuba Beverage Co (OTCMKTS:CUBV) generally sees just shy of 5,000 shares trade hands each day, today’s volume as of 2:35PM EST was well over 1.4 million shares. With today’s massive gains, the company has a market capitalization of over $3.1 million.
This is not the first time this year that news wholly unrelated to a traded company have sent shares soaring.
In January a company in receivership for nearly five years saw its stock gain nearly 2000% in a single day when investors seemingly got it confused with Nest that Google purchased for over $3 billion. A Facebook acquisition had a similar effect on shares to Oculus VisionTech Inc. sending them up over 140% the day after the social media company announced it had purchased Oculas VR Inc.