Investment firm Blue Harbour Holdings announced on Monday that it owns 6.4 percent of Rackspace Hosting, or around 9.1 million shares.
Blue Harbour Group, formed in 2004, manages around $3 billion of capital and its current portfolio companies include Akamai Technologies, Tribune Company and Allscripts Healthcare Solutions.
Blue Harbour already had a 2.5 percent stake in Rackspace in June but increased its stake to 6.4 percent in its recent regulatory filing.
The news of the investment comes as Rackspace has been considering M&A options, hiring Morgan Stanley to lead it through the process. Last month, it was rumored that Rackspace was looking at going private, an idea that gained “significant traction” among its board members.
“Rackspace has built an incredibly valuable business with excellent long-term prospects that we believe are not reflected in the company’s current share price,” Todd R. Marcy, a managing director of Blue Harbour said in a statement. “We believe the Board and management team are committed to closing this significant valuation gap. We look forward to a constructive, ongoing dialogue on the various alternatives Rackspace has to unlock and deliver meaningful shareholder value, whether as a standalone independent entity or pursuant to the current strategic review process.”
Recently Rackspace announced $441 million in revenue in Q2 2014. Rackspace shares closed Monday at $31.82.