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!
