OSLO, Aug 26 (Reuters) - Swedish activist investor Cevian Capital said on Friday it now holds a 5.1% stake in SKF (SKFb.ST), the world's biggest maker of industrial bearings, and argued that the company's stock was undervalued.

SKF's shares rose on the announcement, trading 6.3% higher at 1125 GMT, although the value of the company has still dropped by a fifth so far this year with fears of a looming global recession.

"SKF is a Swedish industrial gem with a strong core business," Cevian co-founder Christer Gardell said in a statement.

"Cevian sees significant long-term value potential in the firm that is far from being reflected in the stock price."

Gardell said Cevian supported SKF's strategy, adding that the key to unlocking the company's potential was to execute its current plans.

Analysts said the investment could prove to be a catalyst for the stock.

"I think people are speculating that Cevian may in time shake things up a bit, as they have with other companies where they are a major investor," Berenberg analyst Joel Spungin said.

Cevian has pushed for change at firms such as Swiss-Swedish conglomerate ABB and Irish cement maker CRH, demanding the simplification of complex organisational structures and in some cases also pushing for new management.

SKF's top shareholder is FAM AB, a holding company owned by foundations linked to Sweden's Wallenberg family, which owns 14.6% of the stock and 28.7% of voting rights.

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