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SHAK Stock Alert: Activist Investor Takes Shake Shack Higher


  • Glenn Welling’s Engaged Capital has taken a position in Shake Shack (SHAK) and launched a proxy battle.
  • Welling wants three board seats and changes to operations he says will increase profits by 50%.
  • Founder Danny Meyer controls the voting shares.
SHAK stock - SHAK Stock Alert: Activist Investor Takes Shake Shack Higher

Source: JHENG YAO / Shutterstock.com

Shares in burger chain Shake Shack (NASDAQ:SHAK) stock rose 4% overnight on news that Glenn Welling’s Engaged Capital plans a proxy battle for three board seats. 

SHAK stock was expected to open today, May 15, at about $68 per share, a market capitalization of $2.8 billion.

Engaged said it has been in contact with Shake Shack management for six months and has a stake of 6.6%, worth about $185 million at the market open. So far in 2023, the stock is up 57%. Shares jumped early in May after it reported a net loss of $1.5 million, four cents per share, but revenue of $253 million, up 24% from 2022.

What Welling Wants

Welling said he could increase Shake Shack’s profits through “operational efficiency.” Many outlets already use computerized kiosks for orders, minimizing headcount to cooks and clean-up.

Shake Shack came public in 2015 at $21 per share. It briefly exploded to $92 per share that year before dropping to $31 two years later. At its height during the 2021 tech boom, it was worth $124 per share. The bear market low was $42.

Welling, who previously made runs at the now-private Jamba Juice and Abercrombie & Fitch (NYSE:ANF), claims he wants changes in the burger chain’s “real estate strategy, store design, labor planning and supply chain framework.” He also wants Shake Shack to change its dual-share structure that lets founder Danny Meyer control nearly 86% of the voting stock.

In addition to his role at Shake Shack, Meyer runs an investment group called Enlightened Hospitality Investments, which led an investment into taco chain Tacombi in 2021. Meyer says he invests in “people-first” hospitality companies.

SHAK Stock: What Happens Next?

Changing the ownership structure of Shake Shack is the biggest ask here. Meyer will need to be paid for that to happen and for SHAK stock to truly be in play.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

Article printed from InvestorPlace Media, https://investorplace.com/2023/05/shak-stock-alert-activist-investor-takes-shake-shack-higher/.

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