Nanotechnology Stocks Saw Big Gains In '03, Some Without Earnings; Patents Likely To Have Value; Tennis rackets, pants and military Humvees among products using nanotech.(A)

Byline: MIKE ANGELL

2003 was a year to think small.

An investor who had bought stocks of companies with the term "nano" (Greek for dwarf) in their names would have seen a return of 309% for 2003. Nanotechnology, a general term for very small man-made objects, is catching investors' attention.

And why not? President Bush has pledged nearly $4 billion to nanotech research over the next four years.

And with nanotech products appearing on the market, many investors say its time has come.

But industry experts say today's investment opportunities are limited to high-risk ventures or scientific instrument makers. Many nano-named companies aren't working in the field of nanotechnology in the strictest sense. And some have yet to see any earnings.

"There's a lot of enthusiasm out there that we think is misguided," said Peter Hebert, co-founder of venture firm Lux Capital and publisher of the Forbes/Wolfe Nanotech Report.