Sony shares added $1.64, or 8.7%, to stand at $20.53 shortly after the opening bell on Wall Street.
Daniel Loeb, chief executive of the hedge fund Third Point, outlined his case in a letter dated Tuesday and hand-delivered to Kazuo Hirai, Sony's president and chief executive.
In the letter, Loeb proposed a public offering of 15%-20% of Sony's entertainment division. Loeb said the capital infusion would help Sony ease its debt burden and provide financing for its electronics division.
"Many casual observers would be surprised to learn that while Sony is electronics, much of its current value is derived from a hidden gem -- Sony's Entertainment division," Loeb wrote. "Like many conglomerates we have invested in previously, Sony has two strong businesses facing different challenges side by side, each obscuring the other's true worth. To maximize Sony's overall success, we believe the company should change the structure of its ownership of Sony Entertainment."
Sony did not issue a direct response to Loeb's proposal. A Sony spokesman said the company welcomes investments.
"As President and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony's growth and are not for sale, and we look forward to continuing a constructive dialogue with our shareholders as we pursue our strategy," Sony spokesman Shiro Kambe said in a statement.