Internet Capital Group Inc., whose market value eclipsed that of General Motors Corp. during the dot-com boom, may face a proxy fight with a hedge fund that contends the holding company is mismanaged.

Mason Capital Management L.L.C., a New York-based hedge fund, said it might seek board seats at Wayne-based Internet Capital. Mason Capital increased its stake to 9.5 percent from 8 percent in December, according to a Securities and Exchange Commission filing.

Internet Capital invests in closely held software companies and expands them so they can be sold or go public, making it akin to a venture-capital or private-equity firm. Its market value soared to $45 billion in January 2000, as investors clamored to get in on up-and-coming e-commerce firms, before crumbling in the subsequent technology bust.

"They did great things during the Internet boom and paid the price on the back end," said Bradley Mook, an analyst with Boenning & Scattergood Inc., of West Conshohocken. "Now they are rebuilding, and some people feel there are things they should be doing to improve returns in the short term."

Internet Capital shares plunged 99 percent from the start of 2000 until the end of 2001, and the company became synonymous with the technology stock bubble and related scandals that implicated Wall Street firms for recommending stocks to boost investment-banking revenue.

The shares rose 13 cents, or 1.3 percent, to close at $10.39 on the Nasdaq, giving Internet Capital a market capitalization of about $400 million. The stock gained 25 percent last year.

Internet Capital was founded by Walter Buckley and Ken Fox in 1996 after the pair worked together at Safeguard Scientifics Inc., another investor in technology start-ups based in Wayne.

The company billed itself as an investor in online industrial-commerce companies and once had more than 70 firms in its portfolio, including Verticalnet Inc., U.S. Interactive Inc. and Onvia Inc. It now has 20 companies, according to a presentation Buckley made at an investor conference this month.

Mason Capital is having conversations with Internet Capital's management and recently "retained the services of a proxy-solicitation firm in connection with their consideration of a proposal that may result in a change in the present board of directors or management," according to its filing.

Mason, with about $2 billion under management, has a history of activism. The firm owned a position in Bloomfield, Conn.-based Kaman Corp. in 2005 and sued the electronics-component-maker over a recapitalization plan. The parties settled the lawsuit in November 2005, and the stock gained 56 percent during that year.

Michael Martino, a principal of Mason Capital, formerly served on the board of Toronto-based Spar Aerospace Ltd., where he helped lead an effort to oust that company's previous board of directors. L3 Communications Holdings Inc. bought Spar in 2002.

Mason Capital spokesman Jonathan Gasthalter declined to comment beyond the filing. Karen Greene, head of investor relations for Internet Capital, said the company had no immediate comment on the filing and did not have a date set for its annual meeting.

Internet Capital is worth more than its share price reflects, Boenning & Scattergood's Mook said. He expects the stock to reach $13 a share in the next 12 months.

"Where the stock trades today is a premium to the book value, but a discount to the market value of the portfolio as a whole," Mook said.

The market value of its holdings, though, involves guesswork because many of the portfolio companies are closely held and do not have to release detailed financial statements, Mook said.

Buckley conceded that point at the conference Jan. 9.

"People say, 'You guys are a confusing model,' and we are," he said in his presentation. "We're very strong, and the most important takeaway is that a number of our companies are really beginning to get critical mass."