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Shares of eBay surge as Elliott Management reveals $1.4 billion stake, recommends portfolio review

Bloomberg | Getty Images eBay's headquarters in San Jose, California, U.S.

Activist hedge fund Elliott Management announced a $1.4 billion stake in eBay in a letter to the e-commerce company's board on Tuesday.

Elliott's stake, which represents more than 4 percent of eBay's shares, comes with an extensive letter of recommendations for the company's future. The fund's "Enhance eBay Plan" suggests the company spin off StubHub as well was eBay's "portfolio of Classifieds properties," as Elliott said the assets "are worth meaningfully more than the value currently being ascribed to them as part of eBay."

Shares of eBay surged 10.6 percent in premarket trading from Friday's close of $31 a share.

Elliott also said eBay should focus on "revitalizing Marketplace," clean up "an inefficient organizational structure" and stabilize the company's leadership, which "has suffered an alarming degree of turnover recently."

The fund estimates that its "Enhancing eBay Plan" would nearly double eBay's value to $55 a share by the end of next year, even without spinning off the StubHub and Classifieds businesses.

Elliot Management has about $34 billion in assets under management, according to the fund's website.

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