Hedge fund manager Daniel Loeb has acquired a 5.1 percent stake in Yahoo and demanded the resignation of Chairman Roy Bostock and a complete shake-up.

Loeb, through his Third Point fund, urged three more Yahoo directors to step down and take steps to maximize shareholder value in the Sunnyvale, Calif.-based search engine and advertising company.

The Third Point investor also made a required filing with the U.S. Securities and Exchange Commission. Other activist shareholders could be expected to join him.

Loeb in the past has invested in such companies as Massey Energy and used the muscle of the $8 billion under management of Third Point to demand management changes and sales. His current technology holdings include Pall and NXP Semiconductor.

Yahoo made a mistake in hiring CEO Carol Bartz, who was fired this week, Loeb said, as well as rejecting a $44 billion takeover bid from Microsoft. Now, the investor seeks resignations of directors involved with hiring Bartz and the Microsoft decision.

They are Bostock, a retired advertising executive; Vyomesh Joshi, printers czar of HP; Arthur Kern, co-founder of American Media; and Susan James, a retired partner of Ernst & Young.

Loeb also said Yahoo should better value its investment in Chinese Web site Alibaba Group, which it said could add $5 to Yahoo's share price immediately and double in value by 2014.

The Third Point principal said he would like to meet with Bostock and other managers to discuss Yahoo's potential.

The company didn't have an immediate response. Yahoo shares rose 3.5 percent to $14.09 after the Third Point filing was disclosed. The enterprise value of the company, which would be crucial to any bidder, is $14.7 billion.