RealPage Inc. (RP) - Get Report got an activist wake-up call Monday after 9.9% stakeholder JHL Capital Group went from a passive investor to an activist after a Friday report that the company rejected a nearly $2 billion bid.

The value investment firm run by James Litinsky said in a regulatory filing Monday that he may talk to the rental housing software company's management and its shareholders about potential strategic or financing partners.

The switch from passive to activist investor came after a Financial Times report Friday that Carrollton, Texas-based RealPage had rejected a nearly $2 billion buyout offer from private equity firm Vista Equity Partners LLC in the past few weeks. It also comes a day before the software company reports its third quarter earnings results.

An analyst familiar with the company confirmed that Vista had made an offer that was rebuffed. This person suggested the buyout shop had hoped to combine RealPage with another similar company and get some "economies of scale and reduce overhead."

Litinsky, who hiked his stake in RealPage to 9.9% in November from 5.7% in July, also said he wants to engage in more extensive dialogue with the rental housing software company's management regarding its strategic direction, capital structure, operations and governance.

RealPage CFO Bryan Hill on July 17 — shortly after Litinsky's public reporting of his stake on July 7 — said the company was taking actions to "restructure or eliminate cost."

However, the $1.7 billion market cap company, may have some other disgruntled investors raising concerns about its governance. Institutional Shareholder Services Inc., a proxy advisory firm, gives RealPage its worst governance risk ranking — a 10 out of 10 — as part of its ISS QuickScore metric. A number of red flags were noted by the firm, according to an ISS report obtained by The Deal, including one for having a classified board and another for requiring a super-majority vote of shareholders to amend its bylaws. In addition, shareholders aren't allowed to call special shareholder meetings or act by written consent, complicating any efforts by a dissident investor to nominate directors and push for a deal. In addition, ISS reports that RealPage also has a number of compensation red flags including at least one related-party transaction involving the CEO. "The CEO's special role in the company demands special attention to even the appearance of self-dealing," ISS said.

RealPage's CEO, Stephen Winn, is the company's largest shareholder and owns a 32.6% stake in the company. Officials from RealPage, JHL and Vista did not return calls for comment. Vista, which focuses on software and technology businesses, is among RealPage's largest shareholders with a 4.8% stake.

It would be unusual for JHL to turn its activist effort into a full-on proxy fight – the Chicago, Ill.-based fund doesn't have a history of launching proxy fights. Litinsky founded JHL in 2006. Prior to that, he was a member of the investment team at Drawbridge Special Opportunities Fund at Fortress Investment Group.

JHL also reported owning a 2.78% cash-settled equity swap position, giving Litinsky a derivatives-based economic exposure to 2.2 million additional shares.

Mark Roberts, analyst at Off Wall Street Research, said he has always thought that RealPage could find a strategic connection with a competitor, adding that their largest rival is privately-owned Yardi, which designs and develops real estate investment management and property software. "if you owned both of those companies you would have a lock on the industry," Roberts said. "You would have to have some sort of strategic reason to acquire RealPage because it doesn't make sense to acquire it otherwise. On a stand-alone basis this seems very expensive."

RealPage had been on The Deal's watch list of companies likely to be targeted by activist based on reporting by Herb Greenberg at TheStreet.com's Reality Check