Shares of Downey Financial ( DSL) were spiking more than 15% after activist investor Gerald J. Ford bought a big stake and suggested that the company was ripe for a takeover.

Hilltop Holdings ( HTH), the insurance company run by Ford, has purchased 1.89 million shares, or 7%, of Downey for approximately $63.4 million, according to a regulatory filing with the Securities and Exchange Commission on Monday.

The type of filing, a Schedule 13D, typically indicates that an investor is acquiring more than 5% of a company and plans to be an active investor. Downey's stock was recently up $4.56 to $34.55, suggesting that investors would be pleased by a sale of the company.

Based in The Newport Beach, Calif., Downey joined big banks including Citigroup ( C), Washington Mutual ( WM) and National City ( NCC), among others, in taking bit hits tied to the downturn in the housing market as well as this summer's credit crunch.

Downey, which specializes in residential mortgages, reported a net loss of $23.4 million, or 84 cents a share, in the third quarter. That compares to a profit of $55.6 million, or $1.99 a share, for the year-earlier period.

Downey operates 168 branches in California and Arizona.

In the filing, Hilltop said it is "engaged in evaluation of potential candidates for acquisitions or strategic transactions," according to the filing. "As part of this evaluation strategy, the reporting person identified Downey as a potential candidate for an acquisition or strategic transaction."

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