Do you remember that Twitter IPO story when people were so desperate to get on board that they started buying the wrong stock? Well, this type of events takes place more often than you think. There most recent example is The Herzfeld Caribbean Basin Fund, Inc. (CUBA), a closed-end fund, shares of which grew substantially on the news of Obama's visit to Cuba. In fact, the premium to its NAV (net asset value) increased to a maximum of 20% a couple of days ago. The premium has decreased since then to 7%, which is still a substantial premium: $CUBA, The Herzfeld Caribbean Basin Fund, Inc. / 1440 Because the closed-end funds universe is pretty small relative to ETFs and mutual funds, as you can see in the video above, it is mostly a playground for retail investors. As you can see, a lot of them make investing decision on impulse: (Source: CEF Connect)The fund has nothing to do with Cuba. In fact, any person with even some basic knowledge about Cuba would know that it is a communist state with no private property (at least anything bigger than small-business). Therefore, a fund containing Cuban publicly-listed equities simply cannot exist. A surge in the fund`s market value confirms retail investors' ignorance on a mass scale. The best thing to do when such events take place is to do arbitrage. In this particular case, short the fund's stock and buy the individual shares constituting the fund. Of course, buying the large amount of names that make up the fund is very time-consuming and cost-ineffective. Hence, the easiest thing to do is simply short the fund's stock. The problem of lack of availability of stock to short has been the main problem for the last two days. This is why Jonathan Rose, the original author of the idea, has been unable to capture the theoretical edge this trade presented. If you can get a hold of the stock - short it! Right now you can capture an ~8% return on this arbitrage opportunity (even you do not go long on the fund's holdings).