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Nanotechnology, which involves the design of materials or devices at the molecular level, hasn't produced many big winners. One stellar performer, however, has been tiny Arrowhead Research (ARWR
), which topped other stocks in the Merrill Lynch (MER
) nanotech index. It zoomed from 1.95 in January, 2004, to 4.32 on Dec. 31. The volatile stock -- not for the faint of heart -- is now at 3.96. The index, made up of 27 nanotech stocks traded in the U.S., has been flat since its Apr. 1 launch. Arrowhead signed a pact in early 2004 with California Institute of Technology to fund Caltech's nanotech research in exchange for the rights to market future products. Karsten Siebert of Midas Research rates Arrowhead, which has yet to make a dime, a "speculative buy." The company could be the "wild card" among the nanotechs because of its close ties with Caltech, Siebert says. The analyst sees the stock hitting 6 in year. Arrowhead President Bruce Stewart says one product apt to hit the market late this year is an atomic force microscope probe, 1,000 times as sensitive as the existing ones. It lets scientists image and manipulate molecules and atoms in nano dimensions.Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial