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USA: Polypore offers more details

Shares of Polypore International (PPO +6.97%) fell 30% on Jan. 31 as panic selling arose from the combination of a short recommendation from Axiom Capital and news that Polypore customer LG Chem would start making its own battery separator membranes — instead of buying them from Polypore, the market assumed.

More than 26 million shares traded hands that day, way above the daily average of 960,000 shares.

Since then, the stock has rebounded to $46.69 a share from the Jan. 31 close at $38.08. That’s still way below the $56.38 close on Jan. 27. (The stock is a member of my Jubak’s Picks portfolio.)

So what did Polypore have to say in an investor call Friday? (Here are instructions on how to listen to the replay.)

The call began with a discussion of the market for separator membranes in lithium batteries, moved to a technical discussion of the differences between wet and dry separators, and then finished with a few details about what it sells to LG Chem and what that Korean company is actually planning to manufacture.

I found it a reasonably good refutation of the math that put the Axiom short recommendation and the LG Chem news together to get panic selling. I’m keeping my one-year target price at $70 a share by January 2013. (Here’s my original post from Feb. 1.)
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