Yahoo Inc. (NDAQ: YHOO) decided to play it safe and settle with activist investor Carl Icahn. The search giant agreed to provide the billionaire investor with three board seats, which will give it some say but no power. The settlement is the latest in the sage over Microsoft's attempt to take over the company. Interestingly, Icahn expressed his belief that a sale of the company merits "full consideration".

Icahn said in a statement he's pleased with the settlement. "While I continue to believe that the sale of the whole company or the sale of its Search business in the right transaction must be given full consideration, I share the view that Yahoo's valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders."

The news of the concession by Yahoo management comes just days after the same management sent a letter to shareholders calling Microsoft's actions "stupifying" and criticizing Carl Icahn for his lack of knowledge of the internet business. However, the move is still seen as a victory for Yahoo. Icahn now has limited voting power while Yahoo management remains in place. So, why did Icahn accept the deal? Many believe that he thought he would end up losing if he went through with the proxy contest.

Perhaps the largest catalyst behind this settlement was Legg Mason's statement that it would back the Yahoo board and urged the two sides to settle their dispute before conducting an actual proxy contest. Carl Icahn owns a 5 percent stake in Yahoo and has been pushing for the company to pursue an acquisition by Microsoft. Eight of Yahoo's directors will now stand for re-election to an expanded 11 member board, including CEO Jerry Yang.

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BlackRock Inc. (NYSE: BLK), the largest publicly traded asset manager, said its second quarter earnings topped estimates as $24.2 billion in new cash flowed into the firm. Net income rose 23 percent as deposits increased the funds under management to $1.43 trillion. Profit was $2.14 per share, which beat the $1.97 per share analysts were predicting.

Investors have moved into BlackRock as its funds have sidestepped the worst of the subprime mortgage collapse and financial sector deterioration. Competitors like Legg Mason were hit with $19 billion of redemptions in the first quarter alone and forced to provide $2.15 billion of its own funds to offset losses tied to mortgage-backed securities.

BlackRock also confirmed that Merrill Lynch & Co (MER) - its largest shareholder - shelved plans to sell its 49 percent stake in order to boost its capital. This is good news for shareholders since it means there won't be a large selling pressure that many were expecting to see.

BlackRock itself is one of the only firms that is able to take advantage of the dislocation in the fixed-income market while it was able to raise $16.7 billion in additional funds. The company also garnered $43.6 billion in advisory assets as investors sought advice on distressed portfolios. Meanwhile, the Federal Reserve picked them to oversee $30 billion in Bear Stearns investments after it was acquired by JP Morgan.

All in all, those looking for a good financial play may want to take a look at BlackRock as it remains a very solid play.

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Eaton Vance Insured Florida Municipal Bond Fund (AMEX: EIF) shares rose marginally this week after the board recently announced its intentions to merger EIF into the Eaton Vance Insured Municipal Bond Fund (AMEX: EIM) at a special meeting of shareholders to be held in October.

The closed-end fund was facing some shareholder concerns that its valuation was being hurt through concentrated geographical risk that was unnecessary to endure. Karpus Management, which owns around 14% of the fund, had been a vocal advocate of such a merger in order to unlock value in the fund. In fact, the activist withdrew its hostile intentions and complimented the fund in its most recent Schedule 13D filing with the SEC.

"We would like to commend the Board for its recently announced recommendation to EIF shareholders to merge EIF into the Eaton Vance Insured Municipal Bond Fund ('EIM') at a special meeting of shareholders to be held in October," said Sharon Thomton of Karpus. "Consequently, we wish to withdraw our termination proposal, director nominees and shareholder list request, which were submitted to EIF on April 17, 2008 and April 24, 2008."

However, Karpus did bring up the fact that a related closed-end fund owned by the same group is facing similar problems:

"Given the Board's recently announced action, we also believe that the Board must also address similar circumstances facing shareholders of FEV. In fact, a press release issued by FEV on December 12, 2007 and reiterated again on June 19, 2008 indicated: '... the Board of Trustees of FEV may in the future consider other actions, potentially including a merger of FEV into a similar closed-end Eaton Vance national municipal bond fund.' Without further action by the Board, shareholders of FEV continue to bear concentrated geographical risk without any additional benefit for doing so."

Both of these funds could represent strong buying opportunities for those investors looking to jump on board an activist campaign. The success in EIF will become apparent when the fund is absorbed by the parent and value is unlocked in the fund's shares. A similar story may emerge in FEV, which makes that stock one worth watching closely!

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