Numerous US technology and biotechnology firms are valued at less than the net cash on their books. Most such situations shouldn’t exist in theory, yet often do following a market panic. Legendary investors Benjamin Graham and David L. Dodd pointed out similar opportunities following the 1929 market crash, calling these sorts of stocks free cigar butts. Many of the firms concerned may be no better than trash, but activists and value investors might be able to drag a last puff of value from some of them.

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Theoretically, most of them should be worth more. If the firms were wound up with little cost or delay, the cash on the books could be distributed to investors. In addition, some business lines, patents and drugs in development could be sold or licensed. Some companies may be worth even more as going concerns. Several of the tech companies, including Adaptec Inc. and Opnext Inc., are cash flow positive.

Worthless? Numerous US biotechnology and technology firms are valued at less than the net cash on their books. Bloomberg

Patient value investors might consider buying a portfolio of these stocks and waiting for the economy—and valuations—to recover. Another option open to some investors might be to try to force actions ranging from strategic changes to liquidation. Activist investor Steel Partners Llc., for example, has acquired an 18% stake in Adaptec.

The market crash has, however, culled the ranks of activist investors after many lost big in panicked rushes for the door. And deep value investors have also suffered after finding out that cheap-looking banks such as Washington Mutual Inc. actually lacked any value at all. Picking out the smokable cigar butts from among the dross isn’t easy. But there should be some there—if only because so many former smokers are ill or have sworn off the habit.