One Yahoo! ( YHOO) shareholder is mad and doesn't want to take it anymore.

Frustrated with the Internet giant's loss of more than one-third of its value in 2006, Eric Jackson wants to use the tactics of activist hedge funds -- like the recent high-profile ousting of Home Depot ( HD) CEO Robert Nardelli by Relational Investors -- to spark a change at Yahoo!

But while Relational shelled out $1 billion for a 1.2% stake in Home Depot, Jackson doesn't exactly have the same financial muscle: He owns fewer than a thousand shares.

So Jackson is setting about recruiting like-minded individual investors in Yahoo! in what he hopes will amount to a virtual activist investor with so much buying power that the company will be forced to listen. He plans to use blogs, video blogs and wikis as his main arsenal.

Jackson already authors Breakout Performance, a well-known blog that offers keen analysis of developments at Yahoo! as well as a way for him to communicate with other investors. On Sunday, he added a short video clip outlining his position for the changes he would like to see at Yahoo! -- what he calls the company's "Plan B" -- to his site.

Far from dissident ravings, however, the plan stresses points that many investors have already been mulling in the wake of Yahoo!'s dismal performance. It ranges from replacing CEO Terry Semel with up-and-coming executive Susan Decker (who is widely seen as Semel's eventual successor) to scaling back its convoluted and often overlapping divisions (as was argued by a Yahoo! senior vice president in the widely circulated "Peanut Butter Manifesto.")

Jackson is presenting his Plan B in the form of a wiki -- a platform that lets many users collaborate -- much like the Wikipedia online encyclopedia. The plan is already benefiting from user input. One user said that the scope of replacement CEO candidates should be expanded beyond Decker, while another suggested that Yahoo! spin off its holdings in Yahoo! Japan, for example. (Yahoo! didn't immediately respond to a request for comment.)

But this far-flung group of individual investors will have to put their money where their collective mouth is are for the plan to really take off. Pooling their Yahoo! holdings -- and the associated voting power -- will give teeth to their vision. In fact, Jackson's goal is to cobble together a breathtaking 10% of Yahoo! stock -- a stake larger than that held by any institutional investor.

Such a target seems outlandish at first, but it's not impossible, Jackson argues. Yahoo! has 250 million registered users, and if 10% of those purchased 50 shares each and joined his group of vigilantes, it would more than exceed the goal. Bringing together 25 million users is still as daunting a task as they come -- but the group could still become a force to be reckoned with even if it controlled far less than a 10% stake.

Jackson, who says he has so far received enthusiastic feedback and commitments of about $1 million in Yahoo! stock, is further emboldened by the frustration he sensed among fellow Yahoo! shareholders since he first became critical of the company's management last fall.

"When I started posting about Terry Semel last fall, I was surprised at how strongly these posts seemed to register with people -- former employees, industry watchers, and just general Yahoo! users. The frustration was palpable," Jackson wrote in an email. "The sense was: this company has so many great assets ...why can't they get it together?"

The frustration is especially acute among current and former Yahoo! employees, many of whom still have stock options tied up in the company and had a front row seat for missteps. One former employee wrote that he or she found it "terribly hard to sit by and watch the current regime at Yahoo! destroy everything I and so many others worked so hard to build," according to Jackson. That employee added that "I still keep in touch with many ex-Yahoos, many of whom are still shareholders, and am willing to coordinate with them as well."

At first glance, Jackson seems an unlikely head of an attempt to pioneer a brazen new way for individual investors to make a dent on the strategy of a major Fortune 500 corporation. Anything but an obscure conspiracy theorist, Jackson heads up a consulting firm that counts major corporations such as General Electric ( GE), JPMorgan Chase ( JPM), Kraft Foods ( KFT) and American Express ( AXP) among its clients.

But what motivates Jackson is a sense of frustration with the status quo combined with a sense of what thoughtful corporate governance can accomplish. Most individual investors tend to throw away their votes, Jackson says, while this group has the potential to make a real difference.

"I'm tired of reading passive bloggers, commentators, and market watchers saying that 2007 should be a good year for Yahoo! because expectations are so low and Google ( GOOG) can't keep growing at the pace it has over the last three years," he says. "Most people say that it is just easier to take your money out of Yahoo! and place a passive bet on Google. But I think there is more upside out of unlocking the value in Yahoo! than in Google."

Jackson's plan is ambitious, to say the very least. Generating a business plan for a major corporation in the same way that open-source movement produces software is audacious enough. Even if that were somehow accomplished, coordinating among a group of investors that large would be, if anything, even more of a challenge.

Still, the Internet provides an ideal platform for this venture. In recent elections, the very real sums of campaign contributions that came about as a result of small donors giving bits and pieces are testament to the hidden financial might that the medium can scrape together. Flash mobs -- groups of people who can rapidly coordinate for a purpose, either in one location or on a distributed basis -- also offer evidence of the Internet's ability to harness spread-out sentiment for collective action.

But Jackson's experiment will be worth watching even it falls short of its lofty goals. If the movement picks up some more momentum, Yahoo! management is sure to take note. He is also right in pointing out the potential of large, well-coordinated groups of individual investors -- and this group will play an increasingly important role in the future.

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