Q: OK, how about another pick? A: Cascade Microtech is a provider of testing and measurement equipment for the high-speed radio-frequency chip industry. They help chip makers capitalize on the need for new chips to handle various applications in wireless Internet traffic. In essence, if you believe that demand will expand for high-performance wireless applications, Cascade should be of interest. It's among the companies working with the major chip manufacturers. Cascade has a market capitalization of only $65 million, with $34 million in cash and no debt, and it is capable of generating $7 million to $10 million in cash flow over the next 12 months. The stock, when you can get it, trades at roughly four times earnings before interest, depreciation and taxes.

Q: But investing in this sector can be perilous, even for a veteran. A: When we do make mistakes, they've come from value traps -- companies with lots of cash, whose technology or services we've misunderstood and that actually are losing, not creating, value. One example: Kirkland, Wash.-based Market Leader [LEDR], a lead-generation system for real-estate brokers. Formerly known as HouseValues, it had the cash and the technical advantage when it came public in December 2004, but the company soon lost its edge and market share.

Q: Let's get specific about what you're doing now. Give us some companies that you're investing in. A: The breakdown of businesses tends to go along state lines. Washington has information technology, consumer and biotechnology. Oregon has semiconductors and industrials, with less activity inland, in Montana and Idaho. Very often what we focus on are discrete brands. For example, take Colorado-based Red Robin [RRGB], a smaller-scale restaurant chain that came public in July 2002 and is very big in our region. It's a highly successful family-friendly gourmet-burger operation, serving lunch and dinner. Who but a native would know that almost every kid in the Pacific Northwest has a birthday party at Red Robin's?

Another example: More than once the fund has caught an early spinoff. One is Digimarc [DMRC], which is based in Oregon and has a $111 million market cap. It's a media-identification concern with $45 million in cash and $65 million in enterprise value. It's more a play on the value of its patent portfolio. Digimarc doesn't yet generate much cash, but it is in two joint ventures with Nielsen, the television audience-measurement people. Digimarc's technology involves using a watermarking system to brand digital products to prove authorship. This is an important area in times of instant downloading and the Internet.

Q: Any others? A: Yes. Triquint Semiconductor [TQNT], based in Oregon, is one of three leading makers of the gallium-arsenide integrated circuits used in wireless-transmission applications. Its products are in demand for mostly high-performance smart applications on iPhones, military radar and telecommunications base-station transmissions. The stock has moved from $2 in March to around $8 a share in recent weeks.

Finally there's Merix [MERX], of Beaverton, Ore. This is a highly troubled printed-circuit-board maker that's going through a reorganization with St. Louis-based Viasystems. Three years ago, Merix experienced trouble that only worsened after it purchased a Hong Kong company. Recently, it has changed its management team. After the merger with Viasystems, subject to shareholder approval, the combined company would be the largest printed-circuit-board maker in the continental U.S. Via plans to take the combined company public by year end. Thus, the merged entity has the possibility of doubling cash flow over two years.

Q: Barron's: For starters, why are you so high on the Pacific Northwest? A: Delafield: Many companies in the Pacific Northwest are undercovered and underserved by both Wall Street and the institutional-investment community. Of course, you have Starbucks [SBUX], Amazon.com [AMZN], Boeing [BA], which still has its main manufacturing facilities here, even though it's headquartered in Chicago, and Microsoft [MSFT]. But beyond them, the coverage drops pretty rapidly.

Q: Barron's: For starters, why are you so high on the Pacific Northwest? A: Delafield: Many companies in the Pacific Northwest are undercovered and underserved by both Wall Street and the institutional-investment community. Of course, you have Starbucks [SBUX], Amazon.com [AMZN], Boeing [BA], which still has its main manufacturing facilities here, even though it's headquartered in Chicago, and Microsoft [MSFT]. But beyond them, the coverage drops pretty rapidly.