A little over two weeks ago, I wrote this article (refer back to it if you want an overview of the company) about Himax Technologies (NASDAQ:HIMX). At that time, it was trading at $4 and I thought that there was a lot to like about it. Since the article was published, shares of HIMX are now up about 46%, and are continuously climbing higher. In the article I tried to show that Himax has strong fundamentals and is not just a one-hit wonder with Google (NASDAQ:GOOG) Glass. In this article I would like to reiterate my "buy" stance on HIMX and provide an update on what exactly is moving this stock--because it is not just Google Glass anymore.
Currently the rumors are, well, just rumors. The idea behind these buyout whispers comes from the historical tendency of Google to acquire its partners so as to retain exclusivity. In fact, Google averaged a little more than one acquisition per week in 2010 and 2011, and has already acquired two companies in the last 30 days (DNNresearch Inc. and Talaria). While there is no concrete evidence that HIMX is actually being considered by a major company for acquisition, the rumors have contributed to the spike in HIMX share price.
Personally, I do not believe that a buyout is best for Himax. It just has too much upside potential to sell at the first sign of profit and the company officers know it. It should, and probably will, stay independent for the foreseeable future.
Here Come The Institutions
Currently, HIMX is 14% institutionally owned. It has also gotten some serious air time and free PR due to the Google Glass rumors and is becoming one of the most followed stocks. The institutions are taking notice and now that it is trading over $5 a share and on the verge of crossing the $1B market cap line (currently sitting at 995.4M), we could start seeing some large institutions begin to scoop up shares. This little guy won't be a hidden gem for much longer.
To put it simply, Himax Technologies is an exciting company. In recent weeks, its stock has seen big gains on days when the overall market has struggled. The volume of HIMX shares being traded has quadrupled in the past month and more and more investors are taking notice. The fact that HIMX has been going up in price on large volume suggests that it is sustainable and should continue.
Don't Forget The Dividend
The company paid out a $0.06 annual dividend last year, which was very small compared with its historical dividend rates. But Himax is a growing company, has turned a corner on net income, and it would not be surprising to see that dividend increased this year, and the announcement should be coming relatively soon, as it has, in the past, paid its dividend in June.
The One Sentence Summary
Google Glass is not the only egg in Himax's basket and it is certainly not a one trick pony.
Also, there are several great articles on SA that outline the fundamentals of the company, which I suggest reading more about if you are considering adding HIMX to your portfolio.
Disclosure: I am long HIMX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.