Cast on 40 sts loosely. Divide sts onto 3 needles. Place marker for beginning of rnd. Join by working the first st on left hand needle with the working yarn from the right hand needle, being careful not to twist sts.
Rnd 1: *K2, p2, rep from * around.
Rep Rnd 1 until piece measures about 6 in. (15 cm) from beg.
Next Rnd: *K19, k in front and then back of next st (increase made), rep from * once 42 sts at the end of this rnd.
Continue in St st worked in the rnd (k every rnd) until piece measures 9 in. (23 cm) from beg.
Next Rnd: *K5, k2tog, rep from * around 36 sts.
Next Rnd and every other Rnd: Knit.
Next Rnd: *K4, k2tog, rep from * around 30 sts.
Next Rnd: *K3, k2tog, rep from * around 24 sts.
Next Rnd: *K2, k2tog, rep from * around 18 sts.
Next Rnd: *K1, k2tog, rep from * around 12 sts.
Next Rnd: K2tog around 6 sts.
Cut yarn, leaving a long tail. Thread tail through remaining sts and gather tightly together. Fasten off.
Following package directions, make a large pompom. Tie pompom to top of Hat.
Weave in ends.