US investment company Harbinger Capital Partners has purchased nearly 10% of Palm for an undisclosed sum.
The New York hedge fund bought 16 million Palm shares, or 9.48% of the handset maker, which put itself up for sale this week.
Palm shares jumped up to 10% yesterday on news of the investment, Reuters said, but closed 3.1% higher at $5.32.
The company is a new investor in Palm, BusinessWeek reported.
Palm has been struggling for some time, with its shares dropping 63% in Q1 after a partnership with Verizon Wireless fell through. It has been haemorrhaging money and holds less than 2% of the smartphone market.
Harbinger made headlines last month with an ambitious plan to build a wholesale-only LTE network covering most of the US by 2015.
It would use spectrum owned by satellite operators SkyTerra and Terrestar Networks. Harbinger owns the former and a stake in the latter.
The company also has investments in US mobile operator Sprint Nextel as well as the New York Times.