Cracking The Code

A Biorefinery Brings Innovation To Ethanol Production

Topping Off… A Bond-Stock Combination Buy

This is Porter & Co.’s The Big Secret on Wall Street, our flagship publication that we publish every Thursday at 4 pm ET. Once a month, we provide to our paid-up subscribers a full report on a stock recommendation, and also a monthly extensive review of the current portfolio… You can go here to see the full portfolio of The Big Secret. Every week in The Big Secret, we provide analysis for non-paid subscribers. If you’re not yet a paid subscriber, to access the full paid issue, the portfolio, and all of our Big Secret insights and recommendations, please click here. We are bringing Big Secret readers a special issue this week – a report from Distressed Investing senior analyst Marty Fridson that features a stock-bond combination investment. Shares of this innovative ethanol biorefinery have fallen significantly from their 2021 high. While profits and positive cash flow have returned – the price of the bond and stock remain depressed. We thought it sounded like a great opportunity to share with a wider audience – and Marty agreed. You can email Lance James, our Director of Customer Care, at this address, with any questions you might have about your subscription… The Big Secret on Wall Street… how to navigate our website… or anything else. You can also email our “Mailbag” address at: [email protected].

Like the stereotype of the Swiss, Alain Treuer is punctual, efficient, and organized.

The result of his self-restrained demeanor is a booming business based on a powerful technology that is anything but restrained. 

In the early 2000s, Treuer – already a successful investor with a background in international finance and experimental energy – began noticing cultural and financial patterns others missed. He saw a global shift underway: energy demand and sustainability were colliding, creating a ripe moment for innovation. Treuer believed that the United States, with its vast cornfields and political appetite for energy independence, would become the battleground for next-generation biofuels. But more than vision, he had something rarer – discipline and patience.

In 2006, he founded a biofuels company with a focus on ethanol production. His approach was calculated. Rather than diving into high-risk, capital-intensive projects, Treuer brought a European sensibility to business – grounded in long-term value and operational efficiency. He recruited a lean but effective team, drawing from both European and American talent, blending financial discipline with agricultural know-how.

What made Treuer particularly effective was his ability to connect dots across disciplines. He was fluent in the language of finance, policy, and engineering – a rare trifecta. As the business gained momentum, he began seeking strategic partners. He knew scale was essential in the highly competitive ethanol industry, and that meant merging with a company that had complementary assets.

Enter a U.S.-based ethanol producer with a strong infrastructure but that was facing growth challenges. The Midwest company had scale, distribution channels, and production capacity. Treuer’s business had his visionary leadership, strong investor backing, and a deep level of technical innovation. Treuer saw the opportunity immediately – and more importantly, he knew how to present it.

He is not the type to chase headlines. Reserved but visionary, his path to founding his original company and merging it with this U.S.-based producer began not in boardrooms, but in the quiet study of his Zurich home, where he often looked over spreadsheets and ethanol market forecasts late into the night.

The 2008 merger between Treuer’s Swiss business and the U.S. ethanol producer wasn’t just a financial transaction. It was a cultural integration. Treuer brought a global perspective to the parochial Midwest business, emphasizing governance, technology upgrades, and disciplined growth. He introduced risk-management protocols that gave investors confidence during the volatile post-recession period. 

Years later, when analysts reviewed the trajectory of this new entity, they often pointed to the merger as a turning point. It wasn’t flashy. It wasn’t loud. But it was transformative.

Cracking The Kernels

Now today, in the heart of America’s Corn Belt, the company has quietly transformed itself from a traditional ethanol producer into a biotech innovator – unlocking more from every kernel of corn than anyone thought possible. While most ethanol producers follow similar steps – grind, ferment, distill – the company Treuer founded has taken those fundamentals and elevated them into a science of precision and profit. They don’t just process corn. They crack it open in a way no one else can.

At the core of their strategy is a groundbreaking technology platform known internally as “MSC,” or Maximized Stillage Co-Products. While that might sound technical, the essence is simple: it extracts more value from each component of the corn kernel by separating and refining its parts – protein, oil, fiber, and starch – before they even enter fermentation.

Traditionally, ethanol plants treat corn as a single-use input: ferment the starch, sell the leftovers (called distillers grains) as animal feed, and move on. This company flipped that model on its head. Its “kernel cracking” starts with advanced mechanical and biochemical separation, essentially dissecting the kernel into multiple high-value streams before it ever reaches the fermentation tanks.

And the end result isn’t just ethanol – it’s ethanol plus. Plus renewable corn oil. Plus ultra-high-protein animal feed. Plus purified ingredients for aquaculture and pet food. Each byproduct is no longer an afterthought but a refined, saleable commodity.

This transformation required more than just fancy equipment. It demanded a cultural shift – from being an ethanol manufacturer to becoming what the current CEO calls a “modern ag-tech company.” Engineers and scientists now work alongside operators in the company’s facilities, applying real-time data analytics and process optimization algorithms to continuously tweak yields and product outputs.

The impact is staggering. 

Where once a bushel of corn might yield 2.8 gallons of ethanol and a low-margin feed byproduct, the midwest ethanol maker now squeezes out those same gallons while also producing more than 50% higher-value protein content from the remaining biomass. This multi-stream output dramatically increases plant profitability, while reducing carbon intensity – a win for both shareholders and sustainability metrics.

Perhaps most importantly, the company has made this system scalable. With retrofits and upgrades rolled out across its 11 U.S. facilities, the company is on track to become the largest producer of fermented, precision-separated corn protein in North America. Competitors have taken note, but its proprietary process – and years of R&D investment – give it a significant head start.

In an era where biofuels face increasing pressure to justify their carbon and economic value, the company whose shares and bonds we are recommending this month is proving that ethanol production doesn’t have to be one-dimensional. By cracking the code on corn kernel optimization, they’ve redefined what it means to be a biorefinery.

A Stock-Bond Combo Investment

In this report we recommend a combined bond-stock investment in the merged ethanol producer described above. The company is a leader in a growing industry. We believe its operating profits – which have been weak for the last few years – are in the early stage of a multi-year rebound. As we see it, investors are not appreciating the turnaround that is underway. 

We like this company’s bond for numerous reasons:

• It’s priced at roughly a 22% discount below its face value
• The annual yield of roughly 17%. 
• The business is beginning to reap the benefits of a five-year capital expenditure program
• Management is reducing expenses that should boost profitability by $50 million annually 
• Though the bonds are unsecured, the value of company assets far exceeds the total of its debt
• The company recently appointed an activist investor with industry expertise to fill three seats on its board of directors