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You missed most of this week's hottest IPOs, didn't you?

That's OK, so did just about everyone else not connected to




or some other big institution. We all want a piece of these things, which means that -- the sales pitches of



Wit Capital

notwithstanding -- virtually no one gets in at the offer price consistently.

But readers who caught

Cory Johnson's

Feb. 22 column know there's another way to play initial public offerings: You buy the incubators, those



wannabes that fund, nurture and, it's hoped, take public portfolios of hot little tech companies.

Valuing an incubator is a tricky, multistage process, however. Because most hold stakes in both public and private companies, the first, and only easy step, is to multiply the number of public-company shares they own by the current price to get a dollar value. Then divide by the number of incubator shares outstanding to get a per-share figure, as in "every share of incubator A controls $2 of public company B's stock."

The incubator's nonpublic holdings are the hard but much more important part because that's where the future IPO moonshots live. Because they're private companies, they don't have to tell the world about their inner workings. So to get some idea of their value, most analysts find comparable public companies and then assume that the not-yet public firms are in the same ballpark.

This kind of analysis has a couple of obvious shortcomings: Just because a company is in the same business as


(CSCO) - Get Free Report



(EBAY) - Get Free Report

, for instance, doesn't mean it's any good at it. And much more ominous for the market in general, the fact that one niche company is worth 20 times sales doesn't mean that the next six clones will be worth the same multiple. Just the opposite is more likely, with too many newcomers causing a shakeout in which everyone's value tanks.

The last thing to consider is management. If the folks in charge of the incubator and/or the portfolio companies have done big things in the past, that's good. If they've had a history of iffy (or nonexistent) results in other fields, then you ask for concrete results in the here and now.

But valuation ambiguities notwithstanding, it's easy to see why incubators are hot. If just one out of a stable of five or six properties turns into a



, then its owner gets both a windfall and serious credibility for future IPOs.

Anyhow, check these out:

Harris & Harris


is an established venture capital firm with a portfolio of 12 tech companies. Recent IPOs include



Silknet Software

(SILK) - Get Free Report


Nanophase Technologies



Alliance Pharmaceutical



London Pacific Group

(LDP) - Get Free Report

has been buying into soon-to-be public companies for more than two decades and counts among its past winners Cisco,

America Online




(ORCL) - Get Free Report

. Recent IPOs include

Ramp Networks

(RAMP) - Get Free Report


Net Perceptions


. Next to go public will be

Saba Software

, a leader in distance learning for corporations.



, with a market cap of $5 billion, hardly qualifies as undiscovered. But it has a venture capital arm that holds some gems and for which it plans to create a tracking stock.

First in the portfolio to be taken public will be

Prism Communications

, a competitive local-exchange carrier that offers high-speed data services. Comdisco execs note that some of Prism's public competitors are worth between $2 billion and $6 billion.

With the heat that's being generated north of the border (see my

column and

follow-up on up-and-coming Canadian tech companies), it's not surprising that a lot of emerging incubators are Canadian, including:




an ex-Peruvian gold-mining concern that recently cashed out and announced a new name (Itemus) and business (technology incubation). It then bought

, an established Canadian incubator, and pieces of start-ups

Intrasoft Technologies


. In the process, it attracted a big-name management team, including the founder of

BCE Emergis

(BCE:Toronto), one of Canada's recent tech success stories.

iTech Capital

(JDX:Toronto), formerly Jordex Resources, is an incubator focusing on U.S. start-ups. Its portfolio includes stakes in

(soon to go public),


Elastic Networks





(EKP:CA) has stakes in

Generation-Net Services







Mount Linux

. Ecompark trades on the

Canadian Ventures Exchange



(XI:CA) just went public via a reverse takeover and owns pieces of



. It recently formed a partnership with

IBM Canada

to do more such deals.

WSI Interactive

(WIZ:CA) owns pieces of








As usual, this just scratches the surface. So let me know what's missing and I'll work them into a follow-up column.

An interesting related topic is companies with stakes in other companies that exceed their own market value. I have almost enough for a column, so steer me to two or three more and I'll do them next time around.

John Rubino, a former equity and bond analyst, writes a column on mutual funds for POV and is a frequent contributor to Individual Investor, Your Money and Consumers Digest. His first book, Main Street, Not Wall Street, was published by William Morrow in 1998. At time of publication, he had no position in any stocks mentioned. While Rubino cannot provide investment advice or recommendations, he invites your feedback at