What Would Ben Graham Do Now?: A New Value Investing Playbook for a Global Age

7. The Profits and Perils of Reputation

Both reputable capital and political access can create advantages for investors at the deal level, but they are somewhat intangible. And similar to intangible assets at the company level (brand value, goodwill, etc.), they can produce a very high return on equity. Two or three people with laptops, business cards, and connections can structure very lucrative deals—an “asset-light” type of deal-making.

However, this same “intangibility” also makes reputable capital and political access the most vulnerable in difficult environments. If you can compete for deals with no real concrete assets, so can your competitors. Just as brands and intellectual property can be copied much easier than a factory or building, ...