(Bloomberg) -- Japanese lender Aozora Bank Ltd. surged the most since March 2020 after a fund linked to activist investor Yoshiaki Murakami reported its holdings and said it may make important proposals.

Aozora shares surged 9.5% in Tokyo, after jumping as much as 18% during the day’s session. City Index Eleventh reported a 5.42% stake in the company, according to a filing to Japan’s Finance Ministry on Wednesday. It further built its position to 6.71%, the fund said in a disclosure after the market close.

Aozora Bank, which had been lending aggressively in the US, lost about a third of its market value earlier this month after saying it would have its first loss in 15 years because of bad loans tied to properties in the country.

“Murakami’s disclosure suggests two possibilities, the start of an activist campaign or a short-term trading play,” said Arun George, an analyst at Global Equity Research Ltd., who publishes on Smartkarma. 

A spokesman for Tokyo-based Aozora declined to comment.

City Index Eleventh has taken stakes in other firm in Japan, boosting shares on expectations their profitability will improve. The Tokyo-based fund hasn’t always been successful with its campaigns though. It sold most of its position in oil refiner Cosmo Energy Holdings Co. last year after failing to get the company to boost returns and consider spinning off its energy business.

The stock has rebounded about 36% from its three-year low reached February 16. It’s still nearly 20% away from recouping its losses this month.

--With assistance from Taiga Uranaka.

(Updates with closing share price and adds activist fund’s latest filing)

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