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Is Key Technology, Inc. (KTEC) A Good Stock To Buy?

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to Key Technology, Inc. (NASDAQ:KTEC). We will take a look at Vuzix Corporation (NASDAQ:VUZI), bebe stores, inc. (NASDAQ:BEBE), Universal Stainless & Alloy Products (NASDAQ:USAP), and Tandy Leather Factory, Inc. (NASDAQ:TLF). All of these stocks’ market caps resemble KTEC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VUZI 6 3258 1
BEBE 4 4604 -5
USAP 5 20451 0
TLF 4 29789 0

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $14 million in KTEC’s case. The least popular stocks in this table are bebe stores, inc. (NASDAQ:BEBE) and Tandy Leather Factory, Inc. (NASDAQ:TLF), while the most popular one is Vuzix Corporation (NASDAQ:VUZI). Key Technology, Inc. (NASDAQ:KTEC) has the same number of bullish hedge fund positions as the least popular stocks in this table – BEBE and TLF. To understand why the smart money isn’t behind this stock, further research is needed. This doesn’t necessarily mean it is not a good stock to buy; it is also possible that investors thought of it as overvalued because they weren’t considering the bullish thesis. In either case, more research is warranted.

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