Prime Quadrant- My First Salvo

Many people said I’d never be president, but I haven’t written anything inflammatory in months. I’ve done a complete 180, just like Trump after winning the election (the first time). Of course, I am only human, and I will occasionally have presidential relapses. I’m afraid today is one of those days.

ian rosarin- prime quadrant

Assets of Prime Quadrant

Prime Quadrant claims $15 billion in Assets under Consultation, a metric they created. This includes any money they have influence over, whether or not it is under their discretionary control. This money is provided by 150 Ultra High Net Worth families.

So the average Prime Quadrant family client has around $100 million. In any case, I have no doubt that Prime Quadrant provides advice at the very top of the market. It most likely has the most distinct high-end wealth advisory brand in Canada.

A premise that appears in many of my posts is at the heart of Prime Quadrant. That premise is: I’ve made a lot of money, so I must be knowledgeable about money. So Ian Rosmarin retires as an executive of a dental supply distributor, discovers the foolproof “endowment model,” and becomes an investment guru overnight.

Ian founded Prime Quadrant in 1997 after becoming dissatisfied with the options for managing his money. The initial focus was on assisting people in moving money offshore and selecting niche money managers.

As you might expect, the emphasis was on “alternative funds,” rather than boring conventional funds. They were looking for double-digit returns with single-digit volatility (hence, Prime Quadrant). They were open to anyone with at least $1 million at the time. And they used to charge 80 basis points.

Prime Quadrant stated a long-term double-digit return objective as recently as April 2009, as seen here:

Nonetheless, in a mid-2011 letter, Ian Rosmarin claims credit for a 9.8% annual return since 2000 and re-states their return objective as “high single-digit/low double-digit”:

This appears to be a case of moving the goalposts to wherever the ball lands. And no mention of volatility and “no negative years”. In fact, achieving 9.8% annualised returns between 2000 and 2011 outperforms the stock market, but that isn’t a fair comparison given the other asset classes involved in an endowment model.

So that necessitates more investigation if, in the first place, you’re comfortable dealing with a company that engages in such shenanigans. The above-mentioned return objective (double-digit returns, single-digit volatility, and no negative years) is no longer visible on their website.

The firm’s name is derived from this goal! The Prime Quadrant has changed location! Cold, hard numbers have been replaced, first with a fish motif:

Finally, it’s all about emotions:

Purposeful Authenticity on the Y-axis and Tenacious Humility on the X-axis, I suppose, is now the Prime Quadrant. My Purposeful Authenticity is off the charts, but I really need to work on my humility’s standard deviation.

Tax laws eventually eroded the benefits of moving money offshore, and Prime Quadrant morphed into a typical multi-family office firm. Taxation, estate planning, resolving disputes with your brother-in-law, and the like. They now make custom fee arrangements based on the needs of the client (unrelated to the size of the client’s assets).

However, they charge minimum fixed fees, so only accounts with a few million dollars will find it worthwhile. Prime Quadrant can advise you on everything from hedge funds to private equity, real estate, and fixed income, as well as how to divide your cottage among your heirs. You can read any number of my stories to dispel the myth that just because someone makes money, they automatically become a money expert. It’s like saying, “I had a concussion, and now I’m a neuroscientist.”

Mo Lidsky has been the driving force behind Prime Quadrant for the past ten years (Ian Rosmarin is now Chairman Emeritus). Yevgeniy Lidsky, Mo is a Top 40 Under 40 type who is currently 38 years old. In another post, I’ll go into more detail about his background. I’ve heard him speak, and he comes across as genuine; he admits his mistakes, such as losing money in 2008 and almost falling for a scam.

He has a somewhat serious demeanour, which is good because I don’t trust anyone who is cheerful. I believe he demonstrates appropriate epistemological humility. Nonetheless, I doubt he was able to attract all of these wealthy clients by telling them that nothing is knowable. When you combine clients who expect the best, a firm that promotes glitzy alternative products, and the elusiveness of alpha in the last decade, you have a recipe for disappointment.

Mo’s signature project was the Prime Quadrant Conference, which was held annually and ostensibly for charitable purposes. This was modelled after SkyBridge’s annual SALT conference in Las Vegas. That is the firm of Anthony “The Mooch” Scaramucci.

Prime Quadrant’s conference drew notable attendees such as Carlyle co-founder David Rubenstein, Apollo Global founder and Epstein pal Leon Black, and others. One year, even The Mooch himself. They also managed to get Sam Zell, the legendary billionaire US real estate investor, to speak twice. Getting all of these legends to fly to Toronto to speak is quite an accomplishment.

It was an impressive production, and I’m sure it raised the firm’s profile by attracting all of the usual suspects family offices. Many people are unaware that having an edge in investing and kissing Sam Zell’s ass are two distinct skill sets. I’ll give you a minute to process this new information.

Sherry Cooper attended one of their conferences. You must be familiar with Sherry. Since the Toronto Stock Exchange opened in 1861, she has predicted every market top and bottom. The Prime Quadrant model is quite unique. Because so much of what they do is custom, you can only speculate on (and dismiss) their performance.

As a result, I am only 99.99% certain that their overall performance is nothing to write home about. However, I have conclusively determined that Mo Lidsky is a mediocre, sappy writer. Liddle Mo Sunshine writes in one bizarre LinkedIn post about a senior citizen Filipino barista he “couldn’t stop thinking about”:

“The future belongs to those who believe in the beauty of their dreams,” Eleanor Roosevelt famously said. May each of you, my dear friends, carve out your rightful place in that future and inspire others to do the same.

You can find more work here.

Leave a Reply

Your email address will not be published.