| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
Star Magnolia Capital's Winter 2025 letter emphasizes the critical importance of long-term relationships in investing, both with investment managers and underlying businesses. The firm operates as an investment advisor helping families build portfolios through carefully selected manager relationships averaging 7.1 years in duration. They target 5-8% inflation-adjusted returns over the long term while accepting volatility and avoiding permanent capital loss. The firm is actively diversifying geographically away from Americas, where they view valuations as frothy, toward Asia and Europe where they see better opportunities. In 2025, they terminated four manager relationships while adding four new ones, maintaining their disciplined approach to relationship management. The letter argues that successful long-term investing depends more on structural design and distance from markets than on temperament or intelligence. Key risks include expensive American market valuations and the temptation for frequent trading that destroys compounding. The firm continues expanding research activities across Asia and Europe while maintaining their focus on patient capital deployment through trusted manager relationships.
Star Magnolia Capital believes that successful long-term investing requires building durable relationships with skilled investment managers rather than pursuing transactional approaches, while maintaining geographic diversification away from expensive markets toward regions with better valuations and long-term growth prospects.
The firm expects to continue diversifying geographically away from Americas toward Asia and Europe where they see better valuations. They plan to maintain their disciplined approach to long-term manager relationships while being prepared to terminate underperforming relationships when necessary. The focus remains on generating 5-8% inflation-adjusted returns over the long term.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | 0700.HK, BRK-A, CVNA, KMX, SPY | Asia, Compounding, Europe, Geographic Diversification, long-term, manager selection, Relationships | - | The letter emphasizes the importance of long-term investing and staying invested despite volatility. The manager discusses how distance from markets and structural design matter more… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AsiaThe firm is increasing exposure to Asian markets as part of geographic diversification away from Americas where valuations are viewed as frothy. The team conducted extensive travel across China, Indonesia, and other Asian markets for research and relationship building. |
China Indonesia Diversification Valuation Research |
EuropeThe firm is expanding European relationships and published research on European shareholder activism. They view Europe as an attractive alternative to expensive American markets and are building manager relationships in the region. |
Activism Shareholder Valuation Diversification Research | |
Long-term InvestingThe letter emphasizes the importance of long-term investing and staying invested despite volatility. The manager discusses how distance from markets and structural design matter more than temperament for successful long-term investing. Examples include Berkshire Hathaway shareholders who stayed invested for decades and achieved compounding returns. |
Compounding Patience Volatility Time Horizon Discipline | |
Relationship ManagementThe firm focuses on building long-term relationships with investment managers rather than transactional approaches. They maintain relationships averaging 7.1 years with current managers and emphasize investing in people rather than just businesses. The letter details their process for both building and terminating manager relationships. |
Partnership Trust Due Diligence Manager Selection Alignment |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| 0700.HK | Shinya also visited Shenzhen, where Star Magnolia Capital organized an educational visit for our families to Tencent's headquarters, alongside meetings with several promising early-stage companies. |
| BRK-A | Miles mentioned that he had been a long-term shareholder of Berkshire Hathaway and had never sold his shares. Over roughly twenty-five years, his investment compounded at about 10.9% annually. The first dollar he invested became approximately thirteen dollars. Since around 1990, Berkshire has only marginally outperformed the S&P 500. By Buffett's own historical standards, this period could be described as mediocre. And yet, admiration for Buffett has not faded—if anything, it has intensified. |
| CVNA | Our portfolio looks very skewed to Carvana, but that is a feature of the strategy – to let winners run. We did not buy Carvana at this size; it is this size because it is up 100x from its 2022 lows. Carvana uses its technology to manage pricing, logistics, inspections, reconditioning workflow, merchandising, and more. These are all cogs in the industrial machine it has assembled to buy and sell cars to end customers. Significant proprietary technology has been developed to enable Carvana's retail and wholesale operations. Because Carvana is digitally native and has significant size and scale, it has been able to invest in significantly more technology than other auto dealers. |
| KMX | Over the past five years, CarMax's shares declined by 62%, while Carvana's shares rose by 73%, leaving CarMax's market capitalization at roughly one-tenth of Carvana's today. |
| SPY | Over the exact same period, the S&P 500 generated an annualized return of around 10.2%. A dollar invested passively in an S&P 500 ETF became roughly eleven dollars. The SPDR S&P 500 ETF Trust, is the most widely owned and actively traded ETF in the world. Its market capitalization today is roughly USD 700 billion—only about 1% of the total market capitalization of the S&P 500 constituents. Yet SPY's typical daily trading volume is USD 30–40 billion, while the combined daily trading volume of the underlying S&P 500 companies is approximately USD 500–700 billion. |
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