Daniel Loeb, a Yahoo! board member, bought an additional 2.5 million shares of the tech company for about $39.5 million, according to a filing with the Securities and Exchange Commission.
Yahoo was already the largest holding of Loeb's hedge fund Third Point. The new investmnet takes its stake to over 73 million shares or about 6 percent of the Internet company's outstanding stock.
These shares were purchased in multiple transactions at prices ranging from $15.76 to $15.90, according to the filing.
The New York-based hedge fund began building a position in Yahoo in 2011, calling for an overhaul of the board of directors and the need for the internet giant to "go back to basics to get into sexy areas on the net."
Loeb secured three seats on the board of the internet company for his hedge fund in May.
(Reuters contributed to this report).