The butterfly offers a robust mental model for viewing the present and the future as it unfolds. Applying the butterfly model to investment opportunities is especially powerful. After all, an investor’s job is to clearly see the present (a caterpillar) while keeping sight of the vast possibilities (a butterfly).
The above quote from the report “Of investment models and butterflies“ sets the stage for viewing growth stock opportunities. When it comes to growth stocks, one must take a step back from the current news flow to reflect upon future possibilities. Shake Shack is a great example of these opportunities.
Shake Shack
The most interesting feature of the Shake Shack (NYSE:SHAK) investment opportunity is that its extraordinary brand potential was self-evident at the time of its IPO in January of 2015. That said, the company’s business model at the time, and until quite recently, prohibited the full realization of Shake Shack’s brand equity opportunity.
Due to the conflict between the extraordinary potential of the Shake Shack brand and its limited business model, I have monitored it casually over the years. Today, the business model limitations are a thing of the past as the company now has a credible blueprint for penetrating the restaurant mass market.
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