News over the weekend of two Detroit pension funds suing Yahoo (NASDAQ:YHOO) for rejecting Microsoft's (NASDAQ:MSFT) $41.2 billion offer, is the first bit of sanity that has come out of this whole story.

The proposed class action, filed by veteran shareholder litigation firm Bernstein Litowitz Berger & Grossman, takes Yahoo directors to task for spurning the Feb. 1 offer and "pursuing all manner of value-destructive third-party deals."

These pension funds are the only party who have the investor interests at heart. Regarding both Yahoo and Microsoft, it's hard to understand what they are thinking. Why would Microsoft pay a 60% premium for the much troubled search engine company? I understand that Microsoft basically wants to replace its own troubled MSN with Yahoo, but why overpay? I am sure that if it invested a fraction of this amount of money to generate more MSN traffic, things would improve.

As for Yahoo, hello? You are being offered such a huge premium, and just because you despise the suitor you reject the deal without presenting it to shareholders. "Yahoo said at the time the bid substantially undervalues the company, failing to take into account its 500 million users worldwide, investments in its advertising platform and lucrative overseas holdings." Well, no offense but if your 500 million users are so lucrative why has your stock fallen by more than 45% pre-offer? Why are you cutting 7% of your workforce because you "forecast a tough 2008?"

Thank you pension funds for finally trying to actually represent your investors. At least someone cares about the investor.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no positions in any stock mentioned as of 2/25/08.