This is Porter’s Daily Journal, a free e-letter from Porter & Co. that provides unfiltered insights on markets, the economy, and life to help readers become better investors. It includes weekday editions and two weekend editions… and is free to all subscribers.

For the remainder of the year – in place of our regular research and insights – we will serve up our version of the “12 Days Of Christmas.” 

Better than eight maids a-milking or 11 pipers piping, Porter & Co.’s version of the “12 Days Of Christmas” brings you something actually useful: hard-earned investment lessons to guide you through 2026. For the remainder of the year – in place of our regular research and insights – we will dish out key lessons from 2025… some earned from pain and others from gain. 

Over the past year, the editors across all of our publications have recommended stocks, bonds, or other trades that have resulted in a mix of outsized performances and humbling underachievements. Starting today and extending through January 2, we will reveal a pivotal lesson – about why a stock soared to double-digit returns, or why one languished. We will also explore the ones that got away – that we sold too soon or that we didn’t recommend at all. 

We wish you a warm and happy holiday season, from all of us here at Porter & Co… and we’ll be back with our usual program on January 5.

Below, Distressed Investing senior analyst Marty Fridson explains his “topping off” strategy that resulted in a double-digit bond win and a triple-digit stock gain.

Marty has a long background in trading, investing, and finance… Over a 25-year span with Wall Street firms including Salomon Brothers, Morgan Stanley, and Merrill Lynch, he became known for his innovative work in credit analysis. He is also author of The Little Book Of Picking Top Stocks – and as readers of his Distressed Investing advisory know, he’s also great at finding underpriced stocks. 

Marty explains his strategy and his big wins below.

Our “topping off” strategy resulted in two wins… with one company.

One of the ways Distressed Investing has helped our readers capture some pretty solid returns is via a strategy we call “topping off” – that is, buying a position in a distressed company’s shares after its bonds have begun to improve, like when a waitress tops off your coffee for no charge at the local diner.

You see, when a distressed company begins to right itself, the prices of its bonds typically follow suit and move up in price. However, it often takes the stock market far longer to take notice of these improvements, creating a window of opportunity for savvy investors.

Distressed Investing’s May 6, 2025, recommendation combined a Green Plains (Nasdaq: GPRE) convertible bond with the company’s common stock – reinforcing the strategy that in some situations, it’s highly attractive to buy a fixed income security with an equity chaser.

Green Plains is the number-four U.S. producer of ethanol, which is derived from corn and is often used as a key ingredient of alcohol. Seven months ago, we recommended, for each $1,000 invested, one Green Plains 2.25% convertible bond due March 15, 2027, plus 61.7 shares of Green Plains common stock. The bond was at $774, a 23% discount to its $1,000 face value, for a yield of around 17%. The stock stood at $3.66, down more than 80% from its trading price $19.90 one year earlier. Green Plains’ share price had been declining steadily over three years. The stock purchase totaled $225. 

Valuations in early May 2025 reflected Green Plains’ poor financial performance in 2024, when revenue fell 28% from 2023 and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) declined 12%. In addition, ethanol faced the prospect of gradually declining demand due to the rising popularity of electric vehicles (“EV”) at the expense of gasoline-fueled autos.

So why did we think there was upside in these Green Plains bonds and stock? Simply stated, change was in the air. Activist investor Ancora Alternatives had acquired a 7% stake in Green Plains and gained control of three of the eight board seats. By the time we made our recommendation, the CEO for the preceding 17 years had stepped down, likely at Ancora’s urging.

Also going for the company was the likelihood of a cyclical improvement in the differential (spread) between the cost of its raw material – corn – and the price that its product – ethanol – would fetch. The wider the spread, the more profitable Green Plains becomes. Historically, the spread averaged $0.15 to $0.20 a gallon, in a range of $0.05 to $0.50. At the time of our recommendation, it was hovering around $0.10 to $0.12 a gallon.

Finally, Green Plains had opportunities to enhance its earnings beyond cyclically related factors. Thanks to acquisitions and investments in new technologies, the company could now generate profitable co-products of the ethanol refining process. Green Plains was in the process of cutting costs through measures such as shutting down a money-losing Minnesota plant and closing its New York research facility, which was no longer needed because the company’s new products had already won customer acceptance.   

As it turned out, investors who followed our recommendation didn’t have to wait long for a payoff. Green Plains’ stock and convertible bond prices were benefiting from the company’s perceived attractiveness as a possible acquisition candidate. On August 11, 2025, Bloomberg Intelligence estimated that based on comparisons with other deals, $10.75 a share was a realistic valuation. By then, shares of Green Plains were at $8.84, up 140% from where we recommended them. The appointment a week later of an insider, Chris Osowski, as the new CEO reinforced perceptions that the company might be for sale.

On August 27, 2025, Green Plains announced that it was selling its Tennessee plant to repay a huge debt owed to financial giant BlackRock. On the strength of that balance sheet improvement, the stock was up 16% before the next day’s open. That was the day we recommended selling half of the stock position at $11.18, up by 205% from our initially recommended purchase price. 

The good news kept coming. On September 17, Green Plains reached an agreement to sell its Clean Fuel Production (“45z”) tax credits, further boosting its projected 2025 EBITDA. Wall Street firms continued upgrading their recommendations and hiking their price targets for the stock. 

On October 14, Green Plains announced the successful startup of its carbon capture and storage system in York, Nebraska. Shares rose 6% the next day and we advised investors to take profits on the convertible bond and remaining shares. With the stock at $12.00 and the bond at $967 – versus the initially recommended price of $774 – total returns for the full holding period of just five months came to 216% on the stock at 26% on the bond.

Normally, our topping-off strategy involves first recommending a company’s bond, then, often months later, recommending the company’s stock. With Green Plains, we did a combined recommendation because the risk/reward ratios on both were compelling. 

We’ve employed the topping-off approach on a handful of occasions – most notably with…

Ethanol might seem like a mundane business compared with AI companies that have dazzled investors this year. But that less-glamorous sector created a spectacular opportunity for distressed investors at a low point for Green Plains in May 2025. We expect similarly attractive risk-reward propositions to arise in the debt market in 2026. The beaten-down company’s stock will sometimes represent an excellent way to pump up the return.

Marty and his team at Distressed Investing have an extraordinary track record – with both distressed debt and distressed equities… Since he began the advisory in March 2023, he’s made 22 distressed-bond recommendations and 10 for distressed stocks – of the 15 current open positions, including seven bonds (up 22%) and eight stocks (up 32%), 10 are in the green, resulting in an average portfolio return of 24%. 

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Porter & Co.
Stevenson, Maryland