Our investment mantra - 'things will not get better or worse, they will become different' - aligns us with indentifying change and how to benefit from it. Sometimes the change is the development and adoption of new technologies such as 3D printing or nanophotonics, or simply the change in management at companies. A great example of the latter has been Filtrona. We own 7.4 per cent of the company in the AXA Framlington UK Select Opportunities Fund (ISIN: GB0003501581).
In January 2011, it was announced that Colin Day would join the company on 1 April that year as chief executive. He was previously chief financial officer of FTSE 100 cleaning and personal care product producer Reckitt Benckiser (RB.). He has changed the way the business is managed at Filtrona.
This includes changing targets, incentives, reporting lines, management structures and innovation. Some merger and acquisition activity has enhanced the strategy and better financial performance had been the result. This has combined with a re-rating of the shares, which have risen by 90 per cent to our fund's year-end since the announcement of his appointment on 13 January 2011. So much for eurozone problems clouding investment decisions over this period.
Filtrona has four divisions:
■ porous technologies;
■ protection and finishing products;
■ coated and security; and
■ cigarette filter manufacturing.
Some of Filtrona's customers include global multinationals such as JCB, Caterpillar, Nestlé, Philip Morris and Kraft. In its third-quarter results, Filtrona reported like-for-like net revenue growth of 4 per cent driven by strong emerging markets growth.
Investors Chronicle rates Filtrona as a 'hold' on the grounds that the company is making strong operational progress and has the allure of diversified revenue streams (read our last update).
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