President Barack Obama relaxing restrictions on Cuba has resulted in a spike for stocks of companies poised to benefit from the potential end of the decades-long trading embargo, but one of the more ridiculous pops resulting from Wednesday's news came in shares of The Herzfeld Caribbean Basin Fund (NASDAQ:CUBA).

Shares of the closed-end fund were trading as much as 47% higher a few hours into the trading day on Wednesday. Trading as high as  $10.04 a share just before noon on Wednesday, Thomas Herzfeld's fund is trading well above the $6.81 price that it was fetching at Tuesday's close. More importantly it represents an unsustainable 29% premium to its Net Asset Value, or NAV, of $7.80 as of Monday's close.

The Herzfeld Caribbean Basin Fund was created by Miami-based Thomas J. Herzfeld Advisors more than two decades ago, awaiting the day when a free Cuba would open up the potential for companies doing business in the Caribbean Basin. 

Most closed-end funds trade at a discount to their underlying assets, and there really isn't a reason to expect The Herzfeld Caribbean Basin Fund to trade any differently. After all, it's not as if the fund has some secret access to Cuba's nonexistent stock market. 

Yes, the fund did pay $63,038 for some Cuban bonds that have been in default since 1960. It also made a handful of small investments in Cuban companies that no longer exist. They're all valued on the fund's book as worthless, and rightfully so. Their appeal beyond collectibles is limited. 

What's in this closed-end fund? Well, more than half of the investments are actually U.S. stocks, largely Florida-based cruise ship operators, infrastructure plays, and homebuilders that stand to benefit when Cuba's port opens to stateside travelers and capital pours in to update the island nation. 

That's a sound approach to playing the end or at the very least softening of the Castro regime in Cuba, but the problem with investors snapping up the closed-end fund today is that they are overpaying for exposure. 

Royal Caribbean (NYSE:RCL) is one of the fund's largest holdings representing representing 5% of the fund's assets as of the end of June. In fact, the cruising industry accounts for nearly 15% of the fund's assets, making it its largest sector concentration.

Buying into the cruise lines makes sense. A report on CNBC indicated that it will be the cruise ships that cash in first since Cuba's hospitality infrastructure -- we're talking about the number and quality of the hotels, restaurants, and service -- are woefully inferior to traveler standards. When travel restrictions are legally eased, cruise ships adding Cuba to their itineraries will have no shortage of passengers wanting to explore the island before returning to their ship's reliable food and staterooms. 

However, the three largest cruise lines and the publicly traded cruise ship spa operator that the fund is invested in were trading between 0.5%-4.2% higher a few hours into the trading day on Wednesday while The Herzfeld Caribbean Basin Fund was peaking. Even the fund's largest holding -- Copa Holdings (NYSE:CPA) at a little more than 7% of its assets -- was only trading 6% higher. Yes, Copa Holdings will benefit as a leading Latin American provider of passenger and cargo services, but investors are realistic. That's not the case with the lightly traded The Herzfeld Caribbean Basin Fund which has a history of spiking insensibly and ultimately unsustainably whenever there's a glimmer of news about the potential for pro-commerce change in Cuba.

Don't chase it higher. You're smarter than that.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.