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Shake Shack (SHAK) Rose after Strong Q4 Results

Fred Alger Management, an investment management company, released its “Alger Small Cap Growth Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. US equities rose in Q1 in anticipation of a soft landing. Corporate earnings added another boost to the soft-landing narrative. Class A shares of the fund outperformed the Russell 2000 Growth Index during the quarter. The consumer discretionary and consumer staples sectors contributed to the fund’s relative performance in the quarter, while information technology and industrials detracted from performance. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Alger Small Cap Growth Fund highlighted stocks like Shake Shack Inc. (NYSE:SHAK) in the first quarter 2024 investor letter. Shake Shack Inc. (NYSE:SHAK) owns, operates, and licenses Shake Shack restaurants. One-month return of Shake Shack Inc. (NYSE:SHAK) was -9.57%, and its shares gained 35.83% of their value over the last 52 weeks. On June 6, 2024, Shake Shack Inc. (NYSE:SHAK) stock closed at $93.40 per share with a market capitalization of $3.964 billion.

Alger Small Cap Growth Fund stated the following regarding Shake Shack Inc. (NYSE:SHAK) in its first quarter 2024 investor letter:

“Shake Shack Inc. (NYSE:SHAK) is an elevated take on classic American cuisine. The company uses high-quality ingredients to craft Angus beef burgers, crinkle-cut fries, crispy chicken, and hot dogs. The company serves a full complement of beverages including house- made lemonade, hand-spun milkshakes, beer, wine, and soft drinks. During the quarter, shares contributed to performance after the company reported strong fiscal fourth quarter results, where earnings beat analyst estimates due to increasing restaurant level operating margins and strong same store sales above consensus, driven by better price mix and increased traffic. Moreover, management gave initial 2024 guidance with revenues in-line with consensus but higher-than-expected earnings, underscoring the company’s recent focus on streamlining operations by leveraging technology investment. Separately, following their fiscal fourth quarter earnings report, Shake Shack announced Rob Lynch as the incoming CEO. effective May 2024, succeeding Randy Garutti upon his retirement. Lynch, the former CEO of Papa John’s, is credited with revitalizing the brand post-2018 and has held senior marketing positions at several other top restaurant chains. With management executing well on its expansion plan to add 80 new restaurants in 2024, many of which with newly implemented drive-through windows, we believe the company remains well positioned for long-term growth potential.”

A cook in a busy kitchen preparing a delicious cooking of burgers and fries.

Shake Shack Inc. (NYSE:SHAK) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Shake Shack Inc. (NYSE:SHAK) at the end of the first quarter which was 28 in the previous quarter. Shake Shack Inc.’s (NYSE:SHAK) first-quarter adjusted EBITDA reached a record level of $35.9 million, and its total sales increased by 14.7% to $290.5 million compared to the first quarter of last year. While we acknowledge the potential of Shake Shack Inc. (NYSE:SHAK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We previously discussed Shake Shack Inc. (NYSE:SHAK) in another article, where we shared Choice Equities Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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Wall Street calls this $3 stock a “Melting Ice Cube.” They said the same thing about BTI before it returned 90%.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

My name is Inan Dogan. I’m the co-founder and Research Director of Insider Monkey. I have an important message for you today.

Since March 2017, my stock picks have returned 16.5% annually. Today, I’ve found an opportunity even bigger than my British American Tobacco call.

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We looked under the cover and realized they were wrong.

We alerted our subscribers, and BTI returned 90% in just 16 months.

Now if you had invested just $10,000 in BTI in June 2024, you’d be sitting on $19,000 in October 2025.

Today, we have identified a nearly identical pattern in a digital-first giant trading at $3.

While the market panics over a surface-level revenue decline, our PhD-led research shows management has actually surgically cut $100 million in waste to focus on high-margin growth.

This pattern is a hallmark of our 16.5% annual return track record. The current opportunity offers a 400% upside potential—dwarfing even our 90% BTI return.

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