SCHEDULE: Herzfeld Fund Ownership Update: 43.75% Stake After Distribution

Thomas J. Herzfeld and advisory clients report a 43.75% beneficial ownership in Herzfeld Credit Income Fund, Inc. following a December 2025 distribution and a 10-to-1 reverse stock split.

Summary

• Thomas J. Herzfeld and advisory clients collectively beneficially own 8,523,628 shares of Herzfeld Credit Income Fund, Inc. common stock, representing 43.75% of the 19,483,671 shares outstanding as of December 30, 2025.
• The reporting person individually holds sole voting and dispositive power over 1,856,241 shares, while shared power over 6,667,387 shares is held with advisory clients.
• A distribution of $0.6867 per share was paid on December 30, 2025, with approximately 80% paid in shares at a price of $2.5799 per share and the remainder in cash.
• Thomas J. Herzfeld received 313,441 shares and advisory clients received 1,141,754 shares as part of this distribution.
• A 10-to-1 reverse stock split was effected on February 6, 2026, at 5:00 PM, with this amendment reporting shares on a pre-split basis.
• Advisory clients engaged in various open market transactions, including both sales and purchases, between December 2025 and February 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a cautious sentiment. While the significant insider ownership and distribution are positive, the reverse stock split and consistent selling by advisory clients at decreasing prices suggest underlying concerns about the fund's performance and market value.

Positives

• Significant beneficial ownership by Thomas J. Herzfeld and advisory clients, totaling 43.75%, indicates strong alignment with shareholder interests.
• The December 2025 distribution of $0.6867 per share provided value to stockholders, with a substantial portion paid in stock, potentially increasing long-term holdings.
• Advisory clients engaged in both buying and selling activity, suggesting active management of their positions.

Negatives

• The 10-to-1 reverse stock split, effective February 6, 2026, often signals concerns about a company's stock price or market perception, potentially making shares less attractive to some investors.
• Advisory clients conducted numerous sales transactions, particularly in January and early February 2026, at declining prices (from $2.7619 down to $1.8331), which could indicate a lack of confidence or portfolio rebalancing.

Risks

• A reverse stock split can sometimes lead to decreased liquidity and may not always result in a sustained increase in share price, potentially signaling underlying operational or financial challenges.
• The significant selling activity by advisory clients, particularly at decreasing prices, could be interpreted as a lack of conviction in the short-term performance of the stock.

Future Outlook

The filing indicates that all future amendments to this Schedule 13D will report share numbers exclusively on a post-reverse stock split basis, signaling a transition in how ownership will be presented going forward.

Management Comments

• The amount reported represents the actual number of shares, which differs from the estimate reported in a prior amendment to this Schedule 13D, received by the reporting person and the Advisory clients in connection with the cash or stock distribution announced on December 30, 2025.
• The ratio of cash and stock received by the reporting person and the Advisory clients was based on such person's election as well as elections of other stockholders, subject to the pro-rata limitation.
• All future amendments will be reported exclusively on a post-split basis.

Industry Context

StockSavvy.ai notes that closed-end funds like Herzfeld Credit Income Fund often use distributions and corporate actions such as reverse stock splits to manage shareholder value and market perception. While distributions are generally positive, a reverse stock split can be a double-edged sword, potentially improving per-share metrics but also sometimes reflecting underlying challenges or a need to meet exchange listing requirements. The active trading by advisory clients suggests ongoing portfolio management within the context of these corporate actions.

Comparison to Industry Standards

• The 43.75% beneficial ownership by Thomas J. Herzfeld and associated advisory clients is a substantial stake, indicating a high level of insider alignment, which is generally viewed positively compared to industry averages where insider ownership might be lower.
• The December 2025 distribution of $0.6867 per share, paid partially in stock, is a common practice for closed-end funds to manage capital and provide returns to shareholders, similar to distributions seen in funds like BlackRock Enhanced Global Dividend Trust or Eaton Vance Tax-Managed Global Dividend Income Fund.
• The 10-to-1 reverse stock split is a significant corporate action. While it can increase the per-share price and potentially attract institutional investors, it often follows periods of sustained low stock prices, a trend observed in other funds or companies facing similar challenges, such as some micro-cap biotech firms or struggling retail companies that execute reverse splits to avoid delisting or improve marketability.

Stakeholder Impact

• Shareholders: The December 2025 distribution provided immediate value, but the reverse stock split will reduce the number of shares held while increasing the per-share price, potentially impacting liquidity and market perception. The active trading by advisory clients could influence market sentiment.
• Advisory Clients: Received a significant portion of the distribution in shares and engaged in active trading, indicating ongoing management of their investment in the fund.

Next Steps

• Future amendments to this Schedule 13D will report share numbers exclusively on a post-reverse stock split basis.

Key Dates

Recommendation

The significant beneficial ownership by Thomas J. Herzfeld and advisory clients, coupled with a recent distribution, provides some stability. However, the 10-to-1 reverse stock split and the pattern of selling by advisory clients at declining prices introduce considerable uncertainty and potential negative sentiment. Investors should hold to observe the post-split market reaction and future performance, as the immediate outlook appears mixed with more downside risk than upside potential based on recent trading patterns.

Keywords

Herzfeld Credit Income Fund, Schedule 13D, Beneficial Ownership, Thomas J. Herzfeld, Reverse Stock Split, Stock Distribution, Closed-End Fund, Investment Management, Shareholder Activity, SEC Filing