Top value manager Marty Whitman says he’s finding a lot of U.S. stocks trading at attractive values right now, particularly in the high-tech arena.

“We have a three-pronged approach to our investments in common stocks,” Whitman tells Barron’s in a recent interview. “One, we want the company to have a super strong financial position. Two, we buy at big discounts to readily ascertainable net asset value. And, three, we like to restrict investments to companies that we think, over the next three to seven years, will grow their net asset value at least 10%, compounded annually. An awful lot of American companies now meet that standard.”

Whitman says he’s finding a lot of values in high-tech stocks like Applied Materials, Microsoft, and AVX, and he’s also interested in community and regional banks.

Whitman also says that as a value investor, one needs to be a “gestaltist”. He says that “every accounting number is important, and is derived from other accounting numbers. So you have to understand the whole accounting cycle. If I want to estimate earnings, and I only have one tool, I would pick the current balance sheet. As a value investor, what you are interested in is whether the company is creating wealth.”

And, Whitman says, there are four things to look for when assessing whether a firm is creating wealth:

• Cash flow from operations that is available to security holders — this is money that can be used to expand the firm’s asset base or reduce liabilities, or can be distributed to shareholders through dividends or stock buybacks.
• Earnings — Whitman says earnings is “creating wealth while consuming cash”.
• Resource conversion — this includes mergers and acquisitions, changes in control, massive recapitalizations, and spinoffs.
• Having extremely attractive access to capital markets.

Whitman also talks about his focused approach (“Diversification is a surrogate — and a damn poor surrogate — for knowledge, elements of control [of a company] and price-consciousness”); his concern about the power of short-sellers; and why he’s high on Hong Kong.