Generally, the greater the stigma or revulsion, the better the bargain.

Seth Klarman is a prominent value investor and founder of the Baupost Group, known for emphasizing “margin of safety” and disciplined contrarianism. This line reflects a recurring theme in distressed and deep-value investing: the best opportunities often appear in situations that most market participants find uncomfortable—companies in scandal, bankruptcy, litigation, severe cyclic downturns, or otherwise “uninvestable” narratives. In such moments, forced selling, career risk, and emotional aversion can push prices below intrinsic value. Klarman has discussed this dynamic in his writings and talks about how stigma and complexity can create mispricings that patient, analytically rigorous investors may exploit.

The quote argues that perceived ugliness is often correlated with undervaluation. When an asset carries social stigma or triggers investor revulsion, demand collapses and the market may price it as if the worst outcome is inevitable. Klarman’s point is not that “bad” is automatically good, but that emotional and reputational pressures can create bargains for investors willing to do careful fundamental work. The greater the discomfort, the fewer the competitors and the larger the potential discount—provided the investor can distinguish temporary fear from permanent impairment. It’s a concise defense of contrarian value investing grounded in behavioral finance and the idea that mispricing is most likely where sentiment is most extreme.