Cablevision Systems Corporation (NYSE: CVC) management may find themselves in hot water after an acitivst hedge fund built up a substantial stake in the cable operator. Harbinger Capital disclosed an 8 percent stake in the company and demanded changes in a Schedule 13D filing with the SEC. The activist hedge fund suggested that shares of Cablevision are undervalued and the company must take certain actions to unlock value.

Traditionally, activist hedge funds aim to force companies to unlock value through a variety of so-called strategic alternatives. These can include a sale or breakup of the company, a change in capital structure, a share buyback or a special dividend. Companies that aren't open to taking these actions will typically face an expensive proxy fight, which involves the activist hedge fund nominating its own directors to the company's board.

Harbinger Capital has experience in this industry as well. Media General and The New York Times were both subjected to demands from the activist hedge fund. Representatives from the hedge fund won three seats on the board of MEdia General while the New York Times agreed to nominate two of its directors after it threatened a proxy fight. So far, Cablevision has agreed to institute its first-ever dividend and is holding meetings with shareholders to discuss other ideas.

Cablevision shares are trading up marginally on the news, moving to $32.47 per share in mid-day trading. It will be interesting to see how many changes Harbinger can force upon Cablevision to unlock value, or whether they will be forced into a proxy battle to overthrow management and institute them themselves.