Activist investor Engaged Capital targets Shake Shack

Engaged Capital has about a 6.6% stake in Shake Shack Inc.

The activist investor is pushing for three board seats at “SHAK”.

The food stock is currently up more than 60% year-to-date.

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Shake Shack Inc (NYSE: SHAK) is trading about 5.0% up this morning after a Wall Street Journal report said Engaged Capital was about to start a proxy fight with the chain of fast casual restaurants.

The activist investor that has about a 6.6% stake in the food company wants three board seats to push for changes that it believes could help the share price that currently sits nearly 50% below the high in 2021, anonymous sources told the WSJ today.

It’s noteworthy, though, that Shake Shack reported its first-quarter financial results about a week ago that handily topped Street estimates. According to the company’s spokesperson:

We are executing our strategic plan and making substantial operational and financial progress. We’re guiding full year 2023 to be a record year with expectations to return restaurant-level margins to 19% to 20%.

The Wall Street Journal also revealed Engaged Capital to have been in talks with Shake Shack since late last year. But those discussions have so far failed to conclude in an agreement.

A representative for Engaged Capital is yet to comment on the report. The hedge fund is known for its push to cut costs at Jamba Inc and was previously involved with Abercrombie & Fitch as well.

Also on Monday, Quo Vadis Capital withdrew its “sell rating” on shares of the New York based company.  Analysts at the firm now do not have a recommendation for the Shake Shack stock.

For the year, this food stock is up more than 60% at writing.


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