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By Bloomberg

Suzuki Motor Corp. rose to a record in Tokyo trading after the hedge fund run by Daniel Loeb said it had acquired a stake in the carmaker, predicting a positive end to a years-long dispute with Volkswagen AG.

An almost five-year arbitration between Suzuki and Volkswagen has “paralyzed” the Japanese company, Loeb’s Third Point LLC said in a letter to investors dated July 31. Suzuki has enough cash to buy back the 19.9 percent stake held by Volkswagen if it succeeds in ending the failed partnership, or will find a way to work together with shareholders if the German carmaker is able to keep its investment, the New York-based fund said.

“With a resolution to the arbitration finally on the horizon and the improving cyclical tailwinds to its dominant Indian business in place, Suzuki seems undervalued today,” Third Point said in the letter, without disclosing the size of the stake. The shares climbed as much as 4.7 percent as of 2:29 p.m. in Tokyo trading, headed for the highest close according to Bloomberg data going back to September 1974.

The stake in Suzuki marks the third investment that the billionaire Loeb has made in the last two years at a major member of Japan Inc., making him one of the highest-profile examples of the nation’s wave of shareholder activism. The activity has been spurred on by Prime Minister Shinzo Abe, who has bet that shaking up Japan’s cozy corporate culture will help reinvigorate its stagnant economy.

Breaching Agreement

Suzuki had been run for 37 years by Osamu Suzuki, who at the end of June ceded the role of president to his son Toshihiro. Osamu, 85, had been the longest-serving head of any major global automaker and continues to be responsible for finalizing arbitration with Volkswagen that began in November 2011. The two have accused one another of breaching an agreement, which was meant to supply Suzuki with technology and provide Volkswagen with wider accesss to the Indian car market.

The Japanese carmaker in June said arbitration proceedings with Volkswagen have been concluded, and the companies are now awaiting the ruling.

Ei Mochizuki, a Suzuki spokesman, declined to comment on Third Point’s stake, saying the company doesn’t discuss individual investors. Suzuki plans to keep its sustainable growth and improve its corporate value through constructive communication with investors, he said.

Suzuki’s handling of the conflict with Volkswagen is the lone point of criticism made by Third Point. Suzuki’s assets in India are worth more than the entire company’s market capitalization, the fund said in its letter.

The carmaker’s majority-owned subsidiary Maruti Suzuki India Ltd. is introducing new models in higher-end segments and using a dominant dealer service network to increase market share in India, which is benefiting from Prime Minister Narendra Modi’s reform and infrastructure investment, Third Point said.

Loeb didn’t immediately respond to an e-mail seeking comment sent outside regular business hours.