(April 5) – “You know technology stocks have been hammered when Bruce C. Baughman is buying them,” writes Danny Hakim in today’s New York Times.

” ‘Ordinarily,’ Mr. Baughman said, ‘I prefer anvil makers.’ “

“He was joking, but only slightly. Professional value investors like Mr. Baughman, who manages money for the San Mateo, Calif., mutual fund giant Franklin Templeton, hunt for small companies whose stocks are selling at bargain prices. They tend to prefer tangible assets, which are priced to move, over companies long on concepts, pipe dreams and hope. During the height of the bull market, value fund managers largely shunned technology stocks and were punished by both the market and by investors who withdrew billions of dollars.”

“Now, there are signs that technology stocks are re-emerging on the radar of the market’s bottom feeders. That could provide a modest glimmer of hope for the embattled sector, though value investors are sticking at least initially to stocks with an industrial bent, like semiconductor and electronic equipment makers.”

” ‘Technology in my portfolio might not be as glamorous as it is in somebody else’s portfolio,’ said Mr. Baughman, who recently bought shares of GenRad, a Westford, Mass., maker of electronic testing equipment, and Hutchinson Technology, a company in Hutchinson, Minn., that makes equipment for disk drives. ‘These are companies that a real techie wouldn’t give a second look to.’ “

“Shunning technology was about the best bet one could make at the beginning of the year, and that is why value funds, particularly those that favor small companies, have prospered. Of the 31 investment categories and styles tracked by Lipper Inc., a mutual fund tracking firm, only one was profitable in the first quarter: small-cap value funds, which gained a whopping 1.1 percent.”

“In times of misery, this is victory.”

“Now, however, the 67.5 percent decline of the Nasdaq composite index from its March 2000 high has changed some value investors’ minds. Many view technology stocks and many other issues as still too expensive. In his annual letter to Berkshire Hathaway shareholders in late February, Warren E. Buffett, the dean of value investing, said there were no bargains in even his own company’s portfolio.”

“But in the first quarter, some value investors began sifting through the wreckage. They are still avoiding concepts, pipe dreams and hope.”

” ‘As broken I.P.O.’s, these companies become interesting,’ said Boniface Zaino, manager of the top-performing $415 million Royce Opportunity fund, up 4.2 percent in the first quarter of this year and a top performer in the category over the last three years. ‘The growth and the markets are still there, but you can buy them for nothing.’ “