NEW YORK ( TheStreet) -- Family Dollar Store ( FDO)is surging after activist investor Nelson Peltz's Trian Fund Management purchased a significant stake in the company.

Peltz bought a 6.58% stake in the discounter, saying shares are undervalued. Trian Fund has met with Family Dollar management, discussing the possibility of increasing its share repurchase, as well as ways to increase sales per square foot. Family Dollar has lagged rival Dollar General ( DG) when it comes to sales.

Shares of Family Dollar are spiking 5.8% to $41.75 in morning trading.

-- Reported by Jeanine Poggi in New York.

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