There was a time, believe it or not, when investors cared about things such as land, buildings and factories. They would pluck out each part of a company's balance sheet, calculate what it was worth, and add the pieces together to get a breakup value. If this was higher than the stock price, they'd mutter "less than the sum of its parts," or "better off dead than alive," and buy the stock, secure in the knowledge that one way or another, this hidden value would be realized.

You don't see that kind of thing very often any more. (Actually, you do, but only in the Old Economy where, prior to this week, no one was looking.) Here in Growth Stock Land, where ideas and potential drive value, a successful company's tangible assets are usually a tiny fraction of its share price.

Except when the asset in question is another company's stock. Every once in a while, a company will end up owning a piece of another that exceeds its own market cap, creating a kind of New Economy asset play. Buy the first, and, in effect, you get the second at a discount. And you get the first company's core business, whatever that may be, for free.

If you're comfortable with

shorting

, you also can

arbitrage

such stocks by buying the first and shorting the second, on the assumption that when the hidden asset is discovered, the spread will narrow.

Herb Greenberg

looked at some of these asset plays in December. Here are a few more to consider:

Investment bank/broker

First Albany

(FACT)

owns half a share of energy incubator

Mechanical Tech

(MKTY)

for each share of its own stock. Mechanical Tech, in turn, owns 1.17 shares of fuel cell maker

Plug Power

(PLUG) - Get Report

for each of its own shares. At the close on Thursday, First Albany was at 38, Mechanical Tech 87 1/2, and Plug Power 123 1/2.

So -- follow along here -- each share of First Albany (at 38, remember) controls around $72 worth of Plug Power, plus half of whatever else Mechanical Tech owns,

plus

First Albany's other operating assets.

Each share of

Telephone and Data

(TDS) - Get Report

owns 1.2 shares of

United States Cellular

(USM) - Get Report

, and, via the pending sale of its

Aeriel Communications

(AERL)

division, half a share of

VoiceStream

(VSTR)

. On Thursday, T&D closed at 100, U.S. Cellular at 66 and VoiceStream at 118 1/2. So each $100 T&D share controls $79 of USM and $59 of VSTR, for a total of $138.

TheStreet Recommends

Each share of disk drive maker

Seagate

(SEG)

controls about 0.6 shares of data-storage giant

Veritas

(VRTS) - Get Report

, along with smaller but not insignificant pieces of several other companies. At 152, Veritas alone comes to $91 per Seagate share, which closed at 67 on Thursday.

Each share of office supplies distributor

Daisytek

(DZTK)

controls 0.85 shares of transaction management company

PFSweb

(PFSW) - Get Report

. Daisytek trades at 23, while PFSweb is at 32, giving Daisytek $27 in PFSweb stock for each share of its own. This one will work itself out soon, because Daisytek intends to spin off the rest of PFSweb later in the year.

Now for something a little more challenging.

Stamford International

is a 70-year-old Canadian company whose stock trades sporadically on the

Nasdaq Pink Sheets

(under the ticker STFZF) and

Canadian Dealers Exchange

(under the ticker STFD), though it reports a price only at the close. To get an intraday quote, you have to call a broker. (The Pink Sheets, by the way, are paper listings of prices for stocks too small or illiquid to trade on the bigger exchanges.)

Legal problems recently forced Stamford to shed all of its assets, except one: about 25% of private, Miami-based

Nanovation

, which, depending on whom you talk to, is either this year's biggest upcoming IPO or an

Agilent

(A) - Get Report

wannabe that never will.

For a sense of the stakes, let's start with today's state-of-the-art communications systems, in which photons race along fiber-optic cables at the speed of light. That's fine, as long as they're moving in a more-or-less straight line. But, like a speeding bullet, light doesn't do turns very well. So to amplify or redirect a signal, photons have to be converted to electrons, manipulated, and then converted back to photons. This both slows things down and costs a fortune.

A photonic switch that eliminates the electron stage is thus networking's holy grail. And, according to its fans (several of whom I know and trust), Nanovation has the goods. Explaining this technology requires terms such as elliptical optical resonator and microcavity laser, which mean no more to me than to most you, so suffice it to say the gadgets Nanovation claims to be able to mass-produce are 100 times smaller than a human hair and operate up to 1,000 times faster than conventional electronic and optoelectronic equipment.

Sometime in June, Stamford shares will be converted to Nanovation's at a ratio of one Nanovation share for every three or four of Stamford. Soon thereafter could come an initial public offering, with Stamford holders treated as insiders and subject to a lockup period. At around US$25, Stamford's current price implies a value of $3 billion for Nanovation, rich for the average IPO but chump change compared to other serious photonics companies such as Agilent and

Avanex

(AVNX)

, which are worth $64 billion and $16 billion, respectively. Put Nanovation in that league (not unreasonable if its technology works as advertised), and today's Stamford shares might end up being worth five to 10 times their current price.

Unfortunately, that's not the end of the story. Some other people with technical credentials and no ax to grind checked out Nanovation's booth at last week's Optical Fiber and Communication Conference, and found a presentation longer on promotion than breakthrough technology. As word spread of this dud of a debut, Stamford's stock fell by half, and the tone of its message boards went from euphoria to foreboding.

I bought into Stamford during the pre-conference runup on the assumption that any IPO with "photonics" attached to it would be worth a few billion in this market. But

do not

read this as a buy recommendation. Stamford/Nanovation is a long-term gamble, where the payoff -- if any -- is a year or more down the road and your money is untouchable in the meantime.

John Rubino, a former equity and bond analyst, 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 was long Stamford International. While Rubino cannot provide investment advice or recommendations, he invites your feedback at

rubinoja@yahoo.com.