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LONDON—Activist investor ValueAct Capital Management LP doubled-down on its big bet on Rolls-Royce Holdings PLC as its stake in the British engine maker topped 10%.

ValueAct crossed the 10% reporting threshold on Nov. 18, Rolls-Royce said Thursday in a regulatory announcement. ValueAct, Rolls-Royce's largest investor, reached the new shareholder level a week after the company issued another profit warning that caused shares to slump.

The investor, which has had a smaller share in Rolls-Royce for some time, crossed the 5% threshold in July.

Shares in the maker of engines for Boeing 787 Dreamliner airliners and for the Airbus Group SE A380 superjumbo have fallen about 24% since ValueAct's stake crossed 5%.

ValueAct now holds more than 183 million shares in Rolls-Royce. The San Francisco-based hedge fund seeks to add long-term value to companies, working behind the scenes with management rather than seeking to fight publicly like many activists.

ValueAct declined to comment on the Rolls-Royce stake.

Rolls-Royce last week said its earnings outlook for next year had worsened and that it may cut its dividend, prompting the worst selloff in the company's stock in 15 years. The company has struggled to deliver on cost-cutting efforts and been hit by weakening demand for some civil aircraft engines, its largest profit contributor.

Analysts worry more bad news may be ahead for Rolls-Royce, which shed its affiliation with luxury car maker decades ago. "A further reset of expectations may come in February," Bernstein Research analyst Christian Laughlin said in a note on Thursday before ValueAct's increased stake was made public.

Rolls-Royce Chief Executive Warren East last week said the activist investor was seeking a seat on the London-based company's board.

ValueAct had slowly been increasing its stake in Rolls-Royce since crossing the 5% threshold even before the latest profit warning. The larger stake doesn't translate into additional powers. ValueAct already had enough shares to call a general shareholder meeting.

"We are in regular contact with ValueAct, as we are with all our major shareholders. We have a common interest in returning Rolls-Royce to profitable growth," Rolls-Royce said Thursday.

Founded by former Fidelity stock picker Jeffrey Ubben, ValueAct gained attention in 2013 when it took a board seat at Microsoft Corp. though it held less than 1% of the stock. It was the first time the software giant appointed an activist shareholder to its board.

"They have some very good questions," Mr. East said a week ago, without detailing them.

Mr. East is due to present details of an operational review to investors next week. He began the process soon after joining Rolls-Royce midyear. The review is aimed at improving long-term profitability at the company and provide greater predictability over its businesses, he has said.

However, Mr. East has said the effort wasn't a strategic review to determine whether Rolls-Royce should exit activities such as its marine engine business.

Write to Robert Wall at robert.wall@wsj.com

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(END) Dow Jones Newswires

November 19, 2015 09:55 ET (14:55 GMT)

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