Krispy Kreme Doughnuts (NYSE:KKD) shareholders have witnessed a decrease in hedge fund sentiment recently.
To the average investor, there are many gauges market participants can use to analyze Mr. Market. A duo of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can outpace the market by a very impressive amount (see just how much).
Just as beneficial, optimistic insider trading sentiment is another way to parse down the marketplace. There are a variety of incentives for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).
Now, it's important to take a peek at the key action surrounding Krispy Kreme Doughnuts (NYSE:KKD).
At the end of the fourth quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially.
Of the funds we track, Chuck Royce's Royce & Associates had the largest position in Krispy Kreme Doughnuts (NYSE:KKD), worth close to $9 million, comprising 0% of its total 13F portfolio. The second largest stake is held by Richard Driehaus of Driehaus Capital, with a $6 million position; 0% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Amy Minella's Cardinal Capital, Ken Griffin's Citadel Investment Group and Jim Simons's Renaissance Technologies.
Due to the fact that Krispy Kreme Doughnuts (NYSE:KKD) has faced bearish sentiment from hedge fund managers, we can see that there was a specific group of funds that decided to sell off their full holdings last quarter. It's worth mentioning that Richard S. Meisenberg's ACK Asset Management dumped the biggest investment of the 450+ funds we key on, worth about $4 million in stock. J. Carlo Cannell's fund, Cannell Capital, also said goodbye to its stock, about $3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Bullish insider trading is most useful when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, Krispy Kreme Doughnuts (NYSE:KKD) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
With the results shown by our time-tested strategies, everyday investors must always pay attention to hedge fund and insider trading activity, and Krispy Kreme Doughnuts (NYSE:KKD) shareholders fit into this picture quite nicely.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.