Winter 2023 Letter

Dear Friends and Families,

A Happy New Year!

Year 2023

We still cannot believe it has been only one year or so since China re-opened to the world and we started traveling again. It was very nice to meet many friends and business partners again in person last year.

We had a few important developments. Firstly, we welcome the new member, Chan Yong, in Singapore. He has already been a valuable part of our research team. Secondly, we bid farewell to our job titles as we want to create a truly flat organization. We also started publishing the new series of our blog, Present Value of the Future: Finding Experts and Unconventional Asset Allocation. We plan to publish new articles at least once a month in the future. Our affiliate, World of Allocators (WOA), also launched a new Family Office Study Group, which now comprises around 40 members. We are excited to make contributions to Asia’s family office developments. Lastly, in July, Shinya was invited to Yunnan to share the "Evolution of Endowment Approach" presentation in front of 20+ university endowments in China as a part of WOA. We are equally excited to see the positive development of China’s endowment industry as well.

Singapore

We are pleased to announce that we will officially commence operations in Singapore on Feb 10, 2024. Since our inception in 2012, we have not altered our business as a multifamily office focusing on the endowment approach. It is also important to mention that we have not changed a word of the Principles, which start with the following five points:

• Star Magnolia Capital endeavors to discover the truth a result of which, we aim not only to survive but also to 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 our investment program. Substantially all of the liquid net worth of the employees is invested alongside with that of the clients, placing our financial interests squarely in line with those of 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 not hesitate to 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.

We are not expanding, but extending what we are doing. Although it is important to have the right size for our organization, we fully understand that size is an enemy of our business. We continue focusing on running a great business with great people to serve our clients with excellent communication on what we think and do. We are happy to make you feel bored because we keep telling the same thing again and again.

Research Activity Updates

The House of Mulans had a busy year. In total, we had 757 Due Diligence Activities throughout the year, including 644 Meetings & Calls. We also had more frequent Sourcing activities this year. For the search of experts, an efficient and effective sourcing is very important and we developed a more systematic sourcing process, but we are still optimizing the process itself. Hopefully we will get better over time.

During the Q4 2023, Shinya and Tiffany conducted a research trip in China and visited three cities (Shenzhen, Beijing and Shanghai) where we met 12 managers and 5 companies, as well as attended at 2 Annual General Meetings, with some of the family members. In addition, our team made three trips to Hong Kong, three trips to Beijing, two trips to Jakarta, two trips to Tokyo, one trip to Taipei, one trip to Ho Chi Minh City, one trip to Manila, and one trip to Kuala Lumpur.

In 2024, while we continue exploring opportunities in China, our research focus will be evenly split among Asia, Europe, and the United States. We have met several promising public equity managers in Europe for the first time in many years. We also began seeing attractive opportunities in expanding our network in the venture capital space during this “winter” period. We plan to conduct research trips to India and Israel in 2024.

Conclusion

Thank you very much for your continuous support. If you have any plans to visit Singapore or Shanghai, please feel free to send us an email. We will take you to our favorite (and affordable) local cuisines to enjoy food and conversation together.