Yahoo (Nasdaq: YHOO), the No. 3 search engine, now has three new directors from Third Point Capital, the New York hedge fund that also boosted its stake in the company.

Following Wednesday's election of Third Point principal Daniel Loeb, along with allies Harry Wilson and Michael Wolf as directors of the beleaguered Sunnyvale, Calif.-based company, the hedge fund said it now owns 5.8 percent of the company, up from the initial 5.2 percent it acquired last year.

The investment is valued around $1.05 billion based on Yahoo's Thursday closing price of $14.87. The shares have declined about 8 percent this year but have risen about 16 percent since last Sept. 5, when CEO Carol Bartz was fired.

The ouster prompted Loeb to start buying into Yahoo, as well as to send letters to Chairman Roy Bostock calling for a better strategy and a new CEO to restore shareholder value.

Subsequently, Loeb led a charge against the next CEO, Scott Thompson, a former executive  with eBay (Nasdaq: EBAY), who resigned May 12 after Third Point fund he and Yahoo director Patti Hart had misrepresented academic credentials in company filings with the U.S. Securities and Exchange Commission.

Hart, CEO of Interactive Gaming Technology (NYSE: IGT) also resigned from the board.

The directors appointed Executive VP Ross Levinsohn, a former executive with Rupert Murdoch's News Corp. (NYSE: NWSA) as Interim CEO. Bostock and three other directors also quit and were replaced by Loeb and his allies.

Third Point and Yahoo signed a standstill agreement, which means the hedge fund no longer seeks to take over the company.

Yahoo's market value is $18.8 billion.