Is Krispy Kreme Doughnuts (KKD) A Good Stock To Buy?

Because Krispy Kreme Doughnuts (NYSE:KKD) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few money managers who sold off their positions entirely by the end of the third quarter. At the top of the heap, Peter Muller’s PDT Partners dropped the biggest position of all the hedgies monitored by Insider Monkey, worth an estimated $4 million in stock, and Jeffrey Moskowitz’s Harvey Partners was right behind this move, as the fund said goodbye to about $3.2 million worth of KKD shares. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Krispy Kreme Doughnuts (NYSE:KKD) but similarly valued. We will take a look at MDC Partners Inc. (USA) (NASDAQ:MDCA), Denny’s Corporation (NASDAQ:DENN), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), and Smith & Wesson Holding Corporation (NASDAQ:SWHC). This group of stocks’ market valuations are similar to KKD’s market valuation.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was just $73 million in KKD’s case. Smith & Wesson Holding Corporation (NASDAQ:SWHC) is the most popular stock in this table. On the other hand Apollo Commercial Real Est. Finance Inc (NYSE:ARI) is the least popular one with only 9 bullish hedge fund positions. Krispy Kreme Doughnuts (NYSE:KKD) is not the most popular stock in this group, but hedge fund interest is still above average. Since this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SWHC might be a better candidate to consider a long position.