Company intangibles: creation vs absorption

In the era of the knowledge economy intangibles are recognized by investors as pivotal value drivers. Previous research of portfolio forming methods based on intangibles is limited by taking into account only the quantity of intangibles. We propose a tool to select companies able to create knowledge (in contrast to the absorption of knowledge), which is a quality of intangibles. To test whether these abilities are results of skill we implement a bootstrap procedure. It shows that only 22% of companies have the skills to create knowledge, but all of them are characterized by positive results of knowledge creation. To show the practical implications of the proposed approach selected companies are combined in a portfolio. This portfolio demonstrates a higher cumulative return, Sharpe ratio and drawdown than S&P500. We also find the increasing importance of intangibles for investors during the crisis. While exogenous shocks influenced both creators and absorbers, we found that intangibles create an obstacle to a sharp drop of market value.