Starboard Value bought shares in Shake Shack. Reuters found a source. The source confirmed this. Now you know.
This marks the third time Starboard has invested in companies that serve food you could make at home for one-tenth the price. First they bought Lamb Weston, which sells frozen french fries to restaurants at a 400% markup. Then Starbucks, where a shot of espresso costs more than the entire coffee bean plant it came from. Now they want a piece of a burger chain that charges $18 for a meal you can get at McDonald's for $6.
The pattern here is unmistakable. Starboard invests in overpriced food. They are very good at finding restaurants where the customer pays $15 and receives $3 worth of ingredients. It's basically arbitrage for people who hate their own money.
Retail traders will see this news and think it means something. They'll check the chart. They'll draw lines. They'll post on Reddit about how Starboard "sees value" and how this is "bullish for burger stocks." They'll buy calls expiring Friday. They'll lose money by Monday.
The headline says activist investor. That means Starboard will probably push for changes. Maybe they'll demand Shake Shack raise prices another 8%. Maybe they'll suggest cutting the size of the burgers while keeping the price the same. Maybe they'll propose a loyalty program where you pay $9.99 a month for the privilege of spending $40 on lunch.
Here's what will actually happen. Starboard will issue a letter. The stock will move 3% in one direction. Financial journalists will write twelve articles about what it all means. The burger will still cost $12. Your technical indicators will still be useless. And somewhere in Connecticut, a man named Chad will buy 100 shares at the top because CNBC told him activist investors create shareholder value.
They create value the same way a fire creates warmth in a house it's currently burning down.
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