Marcato Capital Management reported a 5.2 percent stake in auto parts maker Lear Corp (LEA.N) and the hedge fund said it planned to nominate candidates to the board, sending its shares higher in early trading.
Shares of Lear, which in 2007 rejected a $3 billion buyout attempt by an affiliate of billionaire investor Carl Icahn, rose as much as 8 percent on the New York Stock Exchange on Friday morning.
Marcato - run by Mick McGuire, one of activist investor William Ackman's former partners - becomes the third-largest shareholder in the company with the investment, behind BlackRock Inc (BLK.N) and Robeco Investment Management.
BlackRock holds 7.45 percent of Lear and Robeco Investment Management 5.3 percent, according a regulatory filing.
Marcato said it recently discussed Lear's capital allocation practices and actions, including share repurchases, with the company's senior management. (r.reuters.com/buc85t)
Lear said on Thursday it would accelerate its previously authorized share repurchases and increase its dividend.
"We believe that the market has perceived management to have been lethargic in its actual repurchase of shares," Guggenheim Securities analyst Matthew Stover wrote in a note to clients.
Marcato, whose top holdings include Trinity Place Holdings TPHS.PK, GenCorp Inc GY.N, Cincinnati Bell Inc (CBB.N) and DineEquity Inc (DIN.N), said it would still engage in discussions with the management regarding the nomination of directors.
The fund said that the 5.2 percent stake translates to 5,034,986 shares, which includes options to purchase shares that are exercisable within the next 60 days.
Last week Lear, which has a market value of about $4.92 billion, reported a fourth-quarter profit that beat analysts' expectations.
The company's shares, which have gained 19 percent in value in the last three months, were up 4 percent at $52.92 on the New York Stock Exchange on Friday morning.
(Reporting by Bijoy Koyitty in Bangalore; Editing by Sreejiraj Eluvangal, Supriya Kurane)