What happened

Activist Elliott Management is calling for a shakeup at Goodyear Tire & Rubber (GT -3.63%), including recommending five candidates for the company's board. Investors are excited about the potential or change, sending shares up as much as 29% on Thursday morning.

So what

Elliott Management, the hedge fund run by billionaire Paul Singer, has a long track record of successfully pushing for change inside companies. In a letter to Goodyear's board released Thursday, the fund spotlighted a low operating margin, an underutilized retail platform, and a loss of investor confidence as reason change is needed.

Elliott, which owns about 10% of Goodyear shares, notes that Goodyear has underperformed the S&P 400 mid-cap stock index by 90% over the past five years and by 143% over the past 10 years. It has also underperformed other auto parts stocks.

"It is an unfortunate fact for Goodyear and its investors that over the past decade, owning Goodyear stock has been a disappointment," Elliott portfolio managers Marc Steinberg and Austin Camporin wrote. "We believe the company's poor stock performance is a direct result of its significant margin erosion, suboptimal go-to-market strategy and unfocused brand strategy, which have collectively led to a loss of investor confidence."

Now what

Elliott's letter outlines a plan that the fund believes will lead to a share price boost. That includes enhanced leadership and oversight in the form of five new board members, as well as better monetizing Goodyear's retail footprint and initiating a plan to boost margins. Elliott is not calling for any reduction in plant capacity or factory workforce, and sees no reason for Goodyear to take on new debt.

While investors are obviously pleased to see an activist step in, the letter is at best step one of a long process. Even if Goodyear agrees with Elliott and signs off on its plan, it will still take some time for that plan to be implemented and for results to improve.

Shares of Goodyear fell back some after the initial jump higher, trading up about 16% as of 10:15 a.m. The journey ahead will not be a quick one.