That's one reason NEBS is a pick of Michael Maloney, partner at top-performing Skyline Special Equities Fund. He figures the shares, now 33, should hit 42 next year. They borrow cheaply and lend at double-digit rates. On top of that, they get equity ''kickers'' in the form of warrants, options, or shares. Allied, for instance, has a piece of Gibson Guitar, while Sirrom took a stake in Wolfgang Puck Food, the celebrity chef's cafe and frozen food outfit.
Lenders carry the kickers at original cost until the borrower goes public or gets bought out.
The result is a store of hidden value that doesn't show up on the balance sheet. Sirrom goes for a broader portfolio of smaller high-growth service companies that banks might not touch. They underpromise and overdeliver,'' says Arden C. Armstrong, manager of mas Midcap Growth Fund. Sirrom is not for the squeamish. It's a favorite with momentum investors and short-sellers, and even some admirers ask how well the loan portfolio will hold up in a weaker economy.