Daniel Loeb's Third Point took a new stake in BlackRock, calling the asset manager a "misunderstood franchise."
The hedge fund touted BlackRock's oligopoly in the passive investing world, where its 38 percent market share in exchange-traded funds, or ETFs, is rising, according to Third Point's second quarter investor letter, which was obtained by CNBC.
The firm said BlackRock's iShares had more inflows in the first half than the next 10 competitors combined.
"We think this acceleration in ETFs is just getting started," Third Point said in the letter. "BlackRock is valued like a traditional asset manager but it has much greater potential for structural revenue growth and operating margin expansion."
Third Point did not specify the size of its investment. Shares of BlackRock ticked slightly higher, gaining 0.6 percent to $434.06 in early trading on Wednesday. A representative from BlackRock said, "We're aware that Third Point has taken an ownership position, and we welcome them as a shareholder."
Third Point also said that it had reinitiated an investment in Alibaba thanks to the company's changes to its advertising platform. These include a launch of personalized advertising based on users' profiles and of new ad-buying software targeted toward large brands' marketing needs, the letter said.
"We believe that Alibaba is among the best business models in the global internet sector and is the clear winner in the consolidated Chinese ecommerce market," Third Point wrote.
The firm also declined to specify the size of its investment in Alibaba but said it had owned shares of the Chinese company directly and indirectly, through holdings in Yahoo and SoftBank previously. A representative for Alibaba did not immediately respond to a request for comment. Alibaba shares were up 1.2 percent on Wednesday.
During the second quarter, Third Point generated returns of 4.6 percent, bringing total returns for the year to 10.7 percent. That surpasses the 8.3 percent gain for the Standard & Poor's 500 Index during the first half of 2017.