Mitt Romney is worth $250 million. Why so little?

Romney also lists $6.8 million in net capital gains, a combination of $9 million in capital gains and $2.2 million in capital losses. But you can forget about estimating the size of the portfolio that would yield such gains. The tax return provides practically no information about how Romney made them, although his separate net worth statement shows a long list of securities that were sold last year. Setting aside the portfolio that led to the capital gains, the size of the underlying portfolio that yielded $6.7 million in interest and dividend income in 2011 would probably be around $340 million.

So, if Romney’s reported $250 million net worth seems low compared with his peers, his former partners and his securities portfolio, why would it lag so far behind? Theories abound.

Graphic

Mitt Romney's $250 million net worth is much smaller than that of the other big players in the private-equity and leveraged buyout business, as listed in the latest Forbes 400 list of the richest people in America.

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Perhaps, instead of being greedy, as he could have been, Romney shared the wealth with his seven other senior partners so that each had a one-eighth stake in Bain and its profits.

Or perhaps, during Romney’s years at the firm, Bain’s funds were smaller than those of its peers; although Bain now manages a whopping $65 billion, it did not have its first $1 billion fund until 1998, the year before Romney left. (By then, Blackstone was investing a nearly $4 billion fund, and KKR was investing a $6 billion fund.)

Or maybe, unlike other funds, Bain had to “aggregate” its losses on deals against its gains before taking its 30 percent profit — in other words, despite getting industry-leading fees, the Bain team’s overall investing track record may have been subpar.

Or, unlike KKR, Blackstone, Apollo and Carlyle, Bain has not (yet) decided to cash out by taking the firm public, which often multiplies the founders’ wealth since public-market values are generally higher than private ones.

Or perhaps Romney missed what Kravis called the “golden age” of private equity in the years before the financial crisis because he went off to run the 2002 Olympics and then the state of Massachusetts. (Bloomberg estimates that if Romney had stayed at Bain, his fortune would exceed $1.3 billion.)

He has also been exceedingly charitable with his wealth, although unlike several of his private-equity peers, he has not signed the Giving Pledge, which would commit him to giving most of his fortune to philanthropic causes.

We may never know the full extent of Romney’s fortune; he has not disclosed a longer history of his tax returns, and R. Bradford Malt, the lawyer at Ropes & Gray who manages the Romneys’ trusts, did not respond to an e-mail I sent seeking comment. But to me, while Romney’s departure from Bain and his willingness to spread his firm’s riches around may account for some of the difference between his wealth and that of other private-equity barons, I still can’t help but suspect that the $250 million figure underestimates Romney’s true wealth.

Does it really matter if Romney is worth $250 million, $1 billion or more? Rich is rich after all, right? I think it does, politically as well as substantively.

Politically, the alternatives are not great. If he were perceived as the first real billionaire to run for president, it would only exacerbate popular doubts about how someone living so removed from the concerns of average Americans — or even just 47 percent of them — could effectively represent them.

And if he is not a billionaire, doesn’t it suggest that he was not a great private-equity investor after all, thus torpedoing his claim to understand how to create jobs and get the economy back on track?

Something to keep in mind on Nov. 6.

wdcohan@yahoo.com

William D. Cohan, a columnist for Bloomberg View, is the author of “Money and Power: How Goldman Sachs Came to Rule the World” and “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.” He has worked at Lazard Freres, Merrill Lynch and JPMorgan Chase.

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