Polypore International, Inc. (PPO
) gained 31.5% in the fourth quarter. Sales of electric vehicles (EVs), which use battery separator components manufactured by Polypore, were choppy over the course of 2012. This hurt Polypore's sales volumes and caused it to reduce earnings expectations earlier in the year. In the fall, Polypore held a constructive analyst day, where the company's management team showcased their state of the art manufacturing facilities and differentiated technology. In the aftermath, Polypore's shares began to recover from their pullback earlier in the year. We think the market for EVs has bottomed, and that volumes of hybrids and other EVs should start to pick up. We continue to believe that Polypore's shares are undervalued and its multiple will increase once endmarket growth resumes. (Randy Gwirtzman)
From Baron Funds' fourth quarter commentary.