NEW YORK (CNN/Money) - Like Pink (the pop singer, not the color), Qwest CEO Joe Nacchio insists he's M!ssundazstood. In a hastily arranged conference call early Monday, which Qwest seems to be having a lot of lately, Nacchio acknowledged that the company was the focus of an "informal inquiry" by the Securities and Exchange Commission.

The SEC is interested in the way the Denver telecom booked revenues from some controversial deals in 2000 and 2001. And in a speech later in the day at a New York technology conference, Nacchio blamed the media for stirring up questions about his company's books, denouncing what he called a post-Enron atmosphere of "corporate McCarthyism."

Investors weren't buying it, literally; Qwest's (Q: up $0.40 to $6.75, Research, Estimates) already battered stock skidded a couple of percentage points Monday and continued declining in midday trading Tuesday. Qwest's long-suffering analysts (some of whom sounded notably grouchy on the Monday morning call) weren't buying it either. Indeed, Guzman and Co. analyst Patrick Comack cut his rating on the stock from a "neutral" to a "sell," saying that the SEC investigation was likely to be a "huge overhang to the stock" for some time.

That very well may be true. But some value fund managers see Qwest's problems as an excuse to get in -- not out -- of the stock.

"We just think the market doesn't understand [Qwest], and is severely mispricing it," explains Clint Oppermann, portfolio manager of the Thompson Plumb Select Fund, which counts Qwest as its largest holding. Meanwhile, Wally Weitz of the Weitz Value Fund, a relative newcomer to the stock, has recently been buying more shares in what he calls a "misunderstood" company.

Oppermann and Weitz are well aware of Qwest's many troubles. After two earnings misses, Qwest is trying hard to restore its Street cred -- and to fight off a liquidity crunch that recently forced it to draw down a $4 billion emergency bank line.

The stock, which got crushed in 2001, has fallen more than 30 percent this year alone, and some are suggesting Qwest could even face a Global Crossing-style bankruptcy.

But both Oppermann and Weitz see the situation as far less dire. One of the keys to their optimism, they say, is that Qwest has something Global Crossing didn't -- a solid local telephone franchise, with 25 million paying customers and 18 million access lines.

Qwest may have started out as a typical New Economy telecom, building out an expensive high-speed fiber network. But it used its inflated stock to buy the boring old Baby Bell, U.S. West. Turns out that was a smart move.

Even subtracting out Qwest's $25 billion in debt, and valuing the company's fiber business (generally called "Classic Qwest") at zero, Opperman thinks the company "is worth at least $15 a share" -- that is, more than 60 percent higher than where the stock now trades.

Using similar assumptions, Weitz calculates the value of Qwest's local-phone business at about $12 a share. That's not counting "Classic Qwest" or the potential upside from Qwest's entry into the long-distance market in its local territories. (Qwest still has some regulatory hurdles to clear, but is generally expected to be able to begin offering long distance in at least some of its states later this year.)

"I can imagine why investors would have been somewhere between disappointed and distrustful of Qwest," notes Weitz. But he feels the difference between Qwest's market valuation and what he calculates Qwest is worth is big enough to give him a reasonable "margin of safety" -- even in the face of ongoing SEC scrutiny.

Anyone thinking of buying Qwest at this point had better be prepared for more disquieting revelations -- and more hastily arranged early morning conference calls. But 25 million customers can make up for a lot of sins.

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