Jord's right, the sequence on playing a card specifically states that the card being played can't count towards initiative. Thus, only the other three cards in your hand count, and if you've only got 3, Shadow has initiative.
Another step in the sequence to quote (if people aren't yet convinced) is step 2:
"2. Meet requirements to play The Card. If you are the Free Peoples player and initiative is a requirement for playing The Card, you must have four cards in your hand not counting The Card."
That's saying that if you have an initiative-requiring card, you MUST have a total of 5 cards (or more) in hand to play it, because the one you're playing doesn't count. This just serves to reinforce what Jord said: the card you're playing isn't taken into account when it comes to determining initiative.