Wall Street veteran Bill Priest on making money in stocks, leadership and great culture

Wall Street investing veteran Bill Priest says investors should focus on leadership and culture at companies as much as free cashflow growth if you want to get the best returns. 

Speaking to Livewire while visiting from New York, the Vice-Chair, TD Wealth, and Chairman of the Board of Directors of $50 billion asset manager TD Epoch said good leaders are key to business success and that they need many essential qualities at a minimum. 

"They need to have empathy," says Priest. "I need to be able to understand where you're coming from and vice versa. Large organisations can be so structured that empathy is left out. But empathy matters as that's how we come to understand one another."

Priest also says business leaders must think "tactically" about making the right concessions or demands to achieve optimal outcomes for the broader good. He gives the example of golfers who've double booked a tee time and suggests in some circumstances you should offer to let the other group play if it involves a trade-off for net future benefits. 

On leadership, Priest who co-founded Epoch Investment Partners in 2004, says you have to be tough and empathetic when necessary. Moreover, he says a leader must relentlessly walk and talk the firm's image. 

"You have to be able to say here's our philosophy, here's what's going to drive what we do and the leader has to be physically seen that you're in the game," says Priest.
 "And working as hard as anyone else, I think that's an important part and an inspirational leader has to move things along."

Other advice....and from a hair salon to $50 billion

Priest also says a leader must be able to separate themselves from their team in order to maintain a professional gap even if it's not a natural instinct. He gives the example of the movie Miracle, which tells the story of the U.S. men's ice hockey team's victory at the 1980 Winter Olympics in Lake Placid. 

Priest says after the victory there's a "rocking party", when the coach Herb Brooks (played by Kurt Russell) decides to call it a night at 11pm to let the team enjoy themselves. "You boys earned this. I'm going to let you have it. Good night," the coach tells the team. 

"So, the coach has to leave," says Priest. "So, you have to create this gap if your the leader between yourself and everybody else. It may not be what you personally want to do, but you need that as you cannot effectively lead without staying in that gap."

Finally, Priest suggests a leader has to make tough decisions on behalf of the company at the expense of individuals even if they may be friends. He gives the example of the Master and Commander movie where a ship's commander cuts the ropes on a sinking ship even though his friend does not survive. 

"The institution matters more than the individual, so you've got to save the institution. To be an effective leader," he says. 

Priest says following these principles he was able to take Epoch from its early days in downtrodden offices above a Manhattan hair salon to an established $50 billion asset manager at the heart of Wall Street's power and influence. 

Geopolitics and US debt

On macro-economics and the US's fiscal deficits Priest warned investors to prepare for "a changing world order" - marked by political shifts, supply chain reconfiguration, and potential inflation. 

He suggests the pivot of the US under President Trump to isolationism and America First is not the right strategy given the rise of China, Russia and Iran. 

"America First, if it means America alone is not good because we need alliances," "American alone will have trouble dealing with that axis of autocracies.....I think the markets will be very choppy at best."

Investing success

In terms of making money in the stock market Priest says not to overcomplicate, instead, focus on companies that can deliver consistent free cashflow growth. 

In the Epoch Shareholder Yield Fund, Priest says it seeks companies that allocate capital effectively across dividends, reinvestment for growth, buybacks, and debt reduction. 

"We’ve delivered on our promise," in providing consistent returns for more than 20 years Priest says. 

If you'd like to watch more on what Priest thinks about culture, leadership, markets, and investing success please watch the video above.