Star Magnolia Capital’s mission is to be the pre-eminent multifamily office with global investment portfolios. Our goal is to achieve superior, long-term risk-adjusted returns for our families utilizing investment strategies across global financial markets.
Principles
Star Magnolia Capital endeavors to discover the truth – an understanding of the true workings of the world; as a result of which, we aim not only to survive but also thrive.
The interests of our clients come first in everything we do.
The employees of Star Magnolia Capital are collectively one of the largest clients for the investment program. Substantially all of the liquid net worth of the employees is invested alongside with clients, placing our financial interests squarely in line with the clients.
Star Magnolia Capital will be ethical, fair, honorable, and straightforward in all our business relationships. If there is ever a conflict between the right way and the potentially more profitable but vaguely questionable way, we will choose the right way. Our reputation is our most valuable asset.
Star Magnolia Capital strives to be transparent in our dealings with our major constituencies: our clients, employees, outside advisors and vendors, and the brokerage community. We believe that an open discussion of our investment and business objectives and opinions is in the best interest of Star Magnolia Capital’s investment performance.
Business Objectives
To maintain a highly competent, collegial and coherent team of investment and operating professionals. Star Magnolia Capital is not a one-man show in its investment decision-making process, the management of its business, or its ownership. Star Magnolia consists of investment and operating professionals, who together create a strong team crucial both to the flow of investment ideas and the long-term continuity of the business.
To build a consistent, understandable investment track record to attract and maintain a stable capital base. The investment program seeks to provide clients with compound annual long-term returns before incentive fees that are 5-8% above the annual change of purchasing power without permanent loss of capital. Client portfolios are separately constructed and managed based on clients’ unique investment objectives, risk tolerance and other considerations.
To provide our clients with macroeconomic views that are independent and supported by qualitative and quantitative evidences in order not only to allocate capital where opportunities are abundant, but also to mitigate risks caused by exuberance.
To genuinely and simply enjoy what we do.
Investment Philosophy
Long-Term Focus. It is the proven and the most efficient way to accumulate wealth.
Research-Intensive, Objective Approach. Superior performance can only be achieved through intensive research with an objective mindset and by being an intelligent and informed maverick, rather than blindly following the hordes.
Use Leverage but Not Used by It. Leverage, by itself, does not enhance investment returns. High performance is generated through simple, hard work - intensive research and diversified risk taking.
Intellectual Flexibility and Adaptability. The ability to continuously evaluate new information without bias or ego and to adapt the necessary changes is the key for survival and success.
Risk Management
We define risk as the probability of permanent loss of capital, not mark-to-market volatility. Our risk management philosophy is unique and centered on three distinctive risks: government risk, market risk and operational risk, which we try to minimize through implementing the following procedures.
Government Risk. Protecting clients’ wealth from government risks, such as excessive taxation, expropriation, wars and revolutions, is paramount. We help clients to safeguard their wealth by diversifying their assets in at least three jurisdictions while keeping the operating and tax costs low.
Market Risk. We reduce market risks by diversification and tail risk hedging procedures. As it is impossible to remove all market risks, we prefer to take many different uncorrelated risks and avoid concentration on specific market risks. At the same time, we implement a tail risk hedging procedure to protect our portfolio from extreme market conditions caused by exuberance.
Operational Risk. We heavily invest in our infrastructure and employee training in order to minimize operational risks in our business to avoid the unnecessary cost caused by operational failures. Operational excellence and efficiency are achieved by a combination of high personal integrity and thorough, practical procedures.
Organizational and Ownership Structure
Star Magnolia Capital will build, over time, a strong team to manage the investment program. This size of the organization is large enough to have the analytical talent to drive investment performance, yet small enough to discuss investment ideas and business issues with everyone around a table. Assuring the right interpersonal chemistry across the team means building the team one person at a time by seeking individuals who share our investment and business philosophy.
We do not guarantee large compensation packages to anyone, rather, we offer the opportunity for capital accumulation.
Our employees must agree with all the principles set forth and become partners of its business by contributing predetermined amount of equity into the business. Our objective is to build an organization that can work effectively for many years.
Key Success Factors
Commitment and Aligned Interests. The founding family will make a significant commitment to establish Star Magnolia Capital and entrust its capital to be managed under the same investment principles as other families. The economic interests of the founding family, employees and all other clients are strongly aligned to achieve a long-term success of the company and the investment program.
Performance. Our success is contingent upon achieving the proper balance between risk and reward for each client who entrusts their assets with us. Superior risk-adjusted performance is the goal for Star Magnolia Capital.
Investment Philosophy. Star Magnolia Capital thoughtfully constructs clients’ portfolios based upon clients’ return objectives, risk concerns and existing asset exposures. These portfolios encompass multiple traditional and alternative strategies, some of which may have a larger or smaller percentage allocation depending upon Star Magnolia Capital’s view of both the client’s needs and market dynamics. Whereas its competitors offer only simple, stagnant and mass-produced investments solutions, our “personalized” portfolios are carefully designed, constructed, monitored and adjusted for each of our clients with their individual needs in mind. The selection process for potential investment managers utilized by Star Magnolia Capital is extremely stringent and diligent. We demand impeccable personal integrity and top notch investing credentials. We seek the “best of breed” in speciality or sector and require a track record of consistent and stable performance. We prefer bottom-up, fundamental style investing with minimal leverage and we avoid short term, highly active, over-leveraged trading strategies.
Independent and Objective Opinions. Given Star Magnolia Capital’s structural independence from any large financial institution, we are able to provide our clients with portfolio management solutions and advice that is unbiased and objective. We are free to pursue a truly “open” architecture investment platform where our clients can be assured that investment managers are chosen solely for their investment acumen and risk control. Our fees are transparent, and we have only one constituent, our clients, who pay for our services.
Limited Client Base. Given that Star Magnolia Capital is targeting a very limited prospect base, our clients receive a distinctive level of service and dedication.