It was only three weeks ago that we added Silicon Image (NSDQ: SIMG) to our Equity Trades portfolio, noting at the time that the company would make an attractive takeover target for Qualcomm. Well, it looks Lattice Semiconductor Corporation (NSDQ: LSCC) wasn’t willing to wait around until that happened, making a buyout offer last Tuesday at 7.30 per share, which amounts to a 20% premium over its closing price on January 12^th when we first recommended it.

While we are always thrilled to book such a large gain in such a short period of time, it raises the question of what to do next? While we do not normally recommend buying the acquiring company in the midst of a transaction that has not yet been consummated, in this case we believe that our thesis regarding Silicon Image now transfers over to Lattice Semiconductor, so we are closing our position in SIMG and initiating a new position in LSCC in the STI Equity Trades Portfolio. Sell Silicon Image, and buy LSCC up to $7.50.