From Forbes.com:

Guru Picks
Gurus Cruise With Hertz, Bail On Medtronic
Joshua Lipton, data from Marketocracy 05.28.08, 7:20 PM ET

Ahead of Memorial Day weekend, stock market investors read over the latest news about oil prices and existing home sales and decided it was time to take profits if they had them.

Spooked by crude’s relentless upward trajectory and data from the National Association of Retailers showing another drop in existing home sales, investors couldn’t stomach staying committed to this market. Instead, they bailed: The Dow Jones industrial gave up 145.99 points, or 1.2% to 12479.63 Friday, and finished down 3.9% for the week.

But even in the most skittish of markets, there are still opportunities for those investors willing to do their homework and shoulder some risk. That was what the best-performing online investors, Marketocracy’s M100, did last week as these gurus got to work tracking down smart bets.

Significant buys for the M100 last week included car rental company Hertz Global Holdings.

The company operates from 8,000 locations in 145 countries worldwide. Hertz is the No. 1 airport car rental brand in the U.S. and at 69 major airports in Europe.

There are risks here that investors should consider. Analysts following the company write that Hertz is at the mercy of the travel industry. When consumers decide to stay home, rather than take the kids on the road for a family vacation, the company suffers decreased demand. Also, analysts argue, Ford and General Motors provide 50% of Hertz’s fleet, leaving the company vulnerable to fleet price increases imposed by these car manufacturers.

But bulls put forward a few reasons for hope here including powerful brand awareness and large market share. Analysts also note that Hertz is expanding its off-airport car rental locations, which are more profitable and less sensitive to the cyclical travel economy.

The M100 also figured this one was a bargain: Hertz is pretty cheap relative to its expected earnings power, with a price-to-earnings growth ratio of just 0.73. Its industry average is 0.99.

The stock here hasn’t been a performer over the past year. But it has shown a nice 4% pop over the past month, still trading well below its 52-week high of $27.20. Chairman and Chief Executive Officer Mark P. Frissora, and other members of senior management, will present an overview of the company’s strategies, operations and financial results on Wednesday, May 28. Ahead of that presentation, the M100 carved out a stake.

From rental cars to fighter jets: The gurus also decided last week to commit capital to Lockheed Martin.

Also noteworthy last week: Lockheed Martin put out some good news. The company said that the Department of Defense authorized the purchase of six F-35A aircraft for the Air Force and tentatively approved the purchase of six F-35B aircraft for the Marine Corps. The contract is worth $2.2 billion.

Bulls write that Lockheed benefits from its sheer size and scope–it’s the largest defense company in the world. Analysts following the firm also write that much of the company’s $76 billion backlog is made up of multiyear contracts, offering investors visibility concerning future revenue growth.

Lockheed Martin has also shared in the good times with its shareholders. Morningstar analyst Marisa Thompson, who follows the company, says more prudent cost management and improved capital discipline is driving higher returns on capital and strong free cash flow. Lockheed has used that strong cash position to repurchase 11 million shares for $1.2 billion, and the company has another 21 million shares under the repurchase authorization.

“We expect that the firm has plenty of leeway to continue repurchasing shares and returning cash to shareholders,” Thompson wrote in a recent research note.

She points out that operating profit margins have expanded from 4% to more than 10% due to volume gains, new programs and better cost management. The company is in excellent financial health, as its debt-to-capital ratio has steady improved since the 1990s and now stands at around 30%, Thompson says.

In addition, Lockheed Martin still looks like a pretty good deal: It isn’t too expensive relative to its earnings, both now and looking ahead.

Lockheed Martin will Webcast live a presentation by CEO Bob Stevens on Thursday, May 29. Stevens will highlight the corporation’s performance and growth strategy. Ahead of that presentation, the M100 moved in.

Other buys for the Marketocracy gurus last week included Chiquita Brands International, an international marketer and distributor of fresh food products. The M100 also pushed hard into a couple exchange-traded funds, including Market Vectors Steel, which tracks the AMEX Steel Index. Additionally, they picked up the WisdomTree Emerging Markets High-Yielding Equity Fund, which tracks the performance of the WisdomTree Emerging Markets High-Yielding Equity index. This is a fundamentally weighed index that measures the performance of the highest dividend-yielding stocks selected from the WisdomTree Emerging Markets Dividend Index.

On the sell side, our gurus found a few companies they thought it was time to bail on.

They jumped out of medical-device maker Medtronic. Last week, the company announced better than expected sales, mostly due to its products that help the heart, such as defibrillators and pacemakers.

The Minneapolis-based company reported an 18.2% jump in revenues to $3.9 billion in the fiscal fourth quarter. Two major product categories drove sales up–Cardiac Rhythm Management and Cardiovascular. Despite the large sales jump, earnings for the quarter were flat at $812.0 million, or 74 cents per share, as compared with $812.0 million, or 70 cents per share, in the year-prior quarter. Analysts surveyed by Thomson Financial had expected earnings of 72 cents per share on revenues of $3.7 billion. (See “Medtronic Has A Heart.”)

The stock of Medtronic enjoyed a nice pop on the news, climbing 4.6% in the past five days. The M100 decided to book profit.

Our gurus also parachuted out of software maker SAP AG, travel Web site Ctrip.com International and Associated Banc-Corp. Lastly, in a bullish move on technology, the M100 unwound their positions in UltraShort Technology ProShares, an ETF that moves double in the opposite direction of the Dow Jones U.S. Technology index.

In Pictures: Five Buys, Five Sells

Guru Buys

Hertz Global Holdings

Lockheed Martin

Chiquita Brands International

Market Vectors Steel

WisdomTree Emerging Markets High-Yielding Equity Fund

Guru Sells

Medtronic

SAP AG

Ctrip.com International

Associated Banc-Corp

UltraShort Technology ProShares

Marketocracy.com tracks more than 60,000 online stock portfolios. Of those, the top 100 performing portfolios, the M100, are used to create a real-life mutual fund, the Masters 100 Fund, which is managed by founder Ken Kam. Each week, Guru Picks analyzes the buys and sells of the M100. Click here for more information about Marketocracy.com and its money management services.

Tags: Marketocracy

Rod Johnson writes:

As an open source software provider, we think we should be open about our strategy, too. We’d like to share how we got here, where we’re going and why the journey will be good for Spring, good for Spring users and good for SpringSource.

Our History

The Spring story began in 2001, when I began working on the 30,000 lines of framework code I published along with Expert One-on-One J2EE Design and Development in 2002. My objective was to help others to avoid the pitfalls that I had encountered completing J2EE projects since 1999.

It quickly became clear that others liked the ideas in that code - such as Dependency Injection and the Spring data access abstraction - and benefited from putting them into practice. I was approached by readers who requested that I publish the code and who wanted to contribute.

I quickly came to see some important benefits of open source.

• Most users get the functionality they need for free
• It develops a strong community, which contributes to making the software better
• Open source is inherently anti-bureaucratic
• Open source can underpin a business model with lower sales and marketing costs than a traditional enterprise software company—meaning better value for customers.
• Open source projects (and, hence, open source companies) can attract developers worldwide, rather than in any one geographical area. This represents a huge pool of talent that isn’t available to traditional software vendors.

Real value, Real cost

These benefits are great, but they don’t suspend the laws of gravity or economics.

No software gets developed by magic. In the case of Spring, we brought together an outstanding group of developers early on. There was a big personal cost to those individuals, which could not have been sustained forever. I spent around 18 months out of the workforce working on Spring and the ideas behind it. This affected my family’s financial stability: we even needed to redraw a significant amount from our mortgage. Juergen Hoeller was fortunate to have an employer who understood the potential savings Spring could deliver in building their software product. However, he soon needed to move to part time work–with a corresponding salary sacrifice–to maintain his commitment to Spring. It was that long, intense, focused effort from Juergen and myself that set Spring up for what it is today. Other core developers like Colin Sampaleanu and Thomas Risberg were able to make a more intermittent contribution, through devoting their own personal time and at a sacrifice of their families and friends. This situation was not sustainable enough to underpin critical infrastructure for the enterprise.

In the long term, all software development requires investment. Not just investment in writing code: investment in maintaining it for the long haul.

We founded SpringSource (then Interface21) in 2004 to enable that investment.

The following year we were able to make our first high profile hire, who helped to increase the firepower of the team and its intellectual leadership—Adrian Colyer: IBM Senior Technical Staff Member, lead of the AspectJ project. This was a big milestone. For the first time we were able to make it possible for someone to work on Spring who couldn’t do so otherwise.

Initially our business was based around consulting and training. It became clear that those businesses could not sustain the level of investment that our user community expected and could not enable the delivery of the vision that we were passionate about delivering as technologists. Our growth was constrained; too many of our best people spent the bulk of their time and energy delivering services, with little left to write software; and we were worried that we would burn out our staff with the level of travel and overtime that we were forced to require.

When Spring 2.0 was released several months behind schedule, we realized that our then business model was a starting, rather than an end point. Also in 2006 our vision grew, as the broadening of the Spring Portfolio and our exploration of the potential of the OSGi and Spring models demonstrated the transformational potential of a Spring-based server platform.

We decided to raise funding in 2007 to realize this vision, and bridge our transition from a services business to a software company that could sustain the creation of top quality software.

The benefit was dramatic. We were able to recruit more star developers into the team and enable them to contribute more to open source. We were able to focus talented product developers among our existing staff toward enhancing and extending the Spring Portfolio. We were able to ensure the future of AspectJ after IBM reduced its investment.

Our record of open source releases in the last few months speaks for itself:

• Spring 2.5
• Spring.NET 1.1
• Spring Security 2.0
• Spring Web Flow 2.0
• Spring Batch 1.0 (co-developed by SpringSource and Accenture)
• Spring Web Services 1.5
• Spring Integration
• Spring Dynamic Modules 1.0
• Spring IDE 2.0
• AspectJ 1.6

All these releases move those projects forward significantly and deliver real benefits to users.

We’re also making significant contribution to other open source projects such as Apache Tomcat, Apache HTTPD (the Apache web server that powers much of the Internet) and other Apache projects, and the Mylyn project at Eclipse.

Our Values

Over the last 5 years the Spring team has evolved from a project team into a company, and our business model has changed from a services business into a software company with an outstanding services capability. Throughout this transformation we’ve maintained our core values. In particular:

• We’ve always been focused on technical leadership and excellence.
• We don’t aim to deliver me-too solutions, but to advance the art.
• We deliver pragmatic technical solutions. Software is only as valuable as the results it delivers in the real world.
• We believe that long-term success in open source business requires significant contribution to open source.
• We’re proud of our integrity. We are honest with our community, our users and customers.
• We strive to deliver the utmost value to our customers.
• We treat our users, customers, partners and competitors with respect.
• We value our community and strive to act in its best interests.

Our actions flow from these values. For example:

• We won’t reinvent a good wheel. We will use existing projects where possible, getting involved in them if we think they are important to our users, as with AspectJ, Tomcat and Equinox. We are the most active contributors to the first two of those projects. To this end, you will see us get more involved in the Apache and Eclipse communities. We aim to be the leading provider of enterprise Java open source, so it’s natural for us to take an active role in the communities behind important open source projects.
• We will create new projects where no good solution exists. Spring Batch is a great example of this—bringing Spring values of power, simplicity and consistency to an area that has been sadly neglected in Java infrastructure.

The strength of these values has helped our company through a period of rapid growth. It has also been a key factor in the success of our integration with Covalent, a long-established open source company we acquired in January 2008. The two organizations had a similar culture, making it natural for the staff to integrate. And it helps us to continue to attract outstanding technical and business talent.

Our (and Your) Software

At SpringSource we develop three types of products, which are distinct:

• Ubiquitous programming models and infrastructure. This covers the Spring Portfolio, as well as AspectJ (which we lead) and Tomcat (to which we are a leading contributor). We want everyone to be able to use these projects. Many of them are de facto standard.
• The SpringSource Application Platform. A complete application server product building on the Spring Portfolio and other Apache and EPL software.
• Enterprise value adds. Value adds to both categories of open source products. We provide these via annual subscription to a commercial license for our customers. They enhance productivity in building Spring applications (as in SpringSource Tool Suite), or the operational experience of running those products in production (as in SpringSource Application Management Suite). They do not define programming model or deployment model, but enhance the experience obtainable by using the first two categories of product. Users are not forced to purchase these value adds (unlike with a traditional software license); they can confirm for themselves that they provide value for money.

Our Business Strategy

We redefined enterprise Java with Spring. Our mission is to continue to provide the technical leadership and solutions to take enterprise Java to the next level. We are building a great software company around this.

Currently there is a stark misalignment of software value delivered and economic activity around enterprise Java. The lion’s share of revenue goes to BEA (Oracle) and IBM, yet significant parts of the runtime their customers use is open source, and the innovations that matter in enterprise Java mostly come from elsewhere.

It’s clear that the enterprise Java market needs fresh solutions and it’s also clear that the market would like the solutions from a open source company. We believe that it will be us.

We make money by:

• Providing world class support and services. This includes dependable 24×7 support, outstanding training and consulting services and indemnification for enterprise customers who are understandably risk-averse.
• Adding subscription products that deliver value to complement the Spring Portfolio.
• Selling subscriptions to enterprise editions of our full-stack products.

Our Licensing Strategy

Our recent release of the SpringSource Application Platform under the GPL v3 has generated much discussion. I’d like to take the opportunity to explain our licensing strategy, and why we believe it is the right choice for the Spring community.

First, let’s be completely clear and get an important question out of the way:

We remain committed to the Apache License (and the EPL) everywhere we’ve used it. However, not all software is alike. Different licenses are appropriate for different products. This year, SpringSource has brought several important new products to market for which different licensing is appropriate.

Licenses other than the Apache License have two purposes for us:

• For additional products available only to our customers. These products satisfy a real need for those customers, and help to sustain the open source software that they and others benefit from.
• To ensure that ISVs and OEMs using our new stack products don’t get a free ride from software we develop for our community, and that software vendors can’t compete with us with our own code. The GPL v3 license used for the SpringSource Application Platform meets this goal, while remaining free to end users or open source usage.
  Let’s consider the second point in detail where the SpringSource Application Platform is concerned. This is a full stack product that competes with offerings from Oracle/BEA (WebLogic, OC4J), IBM (WebSphere) and Red Hat (JBoss). All those vendors recognize that they also need a mature OSGi-based runtime. We have a substantial technology lead in this area. All three will need to do the heavy lifting we’ve done with SpringSource Application Platform’s dm-Kernel™.

Suppose that we published SpringSource Application Platform under the ASL. We could expect these vendors to compete with us in short order and they would likely charge their customers for products that use the technology. Not only would this be unfair, but it would reduce our ability to invest in the product - ultimately hurting the entire community.

So we chose a license that means that end users can freely benefit from our work, but competitors can’t compete with us with our own code.

Where Next?

For years, we’ve created great technology. Today we’re creating more than ever. We’re proud that we’ve helped to drive the transformation of enterprise Java from the misery of EJB 1.x and 2.x to agile development with POJOs. We’ve delivered billions of dollars of value to enterprise customers and we’ll deliver much more in the future.

We’re excited about continuing the story and delivering more, better infrastructure. The enterprise Java community needs a company focused on delivering best of breed solutions. We redefined enterprise Java once with Spring and it’s another new season for enterprise Java with the SpringSource Application Platform . Please challenge us as we challenge the status quo.

Tags: SpringSource

Marco Casario writes:

Grails is growing more and more and it’s gaining an important role over the Java community. Grails is an open-source web application framework that leverages the Groovy language (a cool dynamic language) and complements Java Web development. The Grails framework is built on top of  Spring , an establised enterprise framework.

The community is huge and you can now find a lot of interesting and useful plugin system  to speed up andintegrate integrates Grails with technologies Java people care about like GWT, DWR, JMS, IntelliJ, search operations are based on Luceneand and others.

Recently a new plugin for Adobe Flex, Livecycle DS and BlazeDS  is available for the Grails framework:

Grails Flex Plugin

the installation of the plugin is very easy. It’s enough to launch it using this command line :

grails install-plugin flex

And you’ll be ready to specify a Grails service as a remoting destination for Blaze DS or Livecycle DS using the expose property to your service class :

static expose = [’flex-remoting’]

Grails is a framework for which I’m very eager to know more. I hope this summer I’ll find the time to write some tutorials about the use of Grails plugin for Adobe Flex, Livecycle DS and BlazeDS.

Grails plugin for Adobe Flex and BlazeDS features

* Automatic configuration of Flex related web descriptor elements - For Flex to work configuration of servlets etc. are required in the web descriptor. This plugin automatically does this configuration.
* Eposing Grails services as Flex remoting destinations - When using Flex remoting services each Java service need to be configured within Flex using xml configuration. When exposing Grails service classes with this plugin this configuration is not needed anymore. The service class will automatically be registered within the Flex message broker.
* Participation in reloading of exposed Grails services - This plugin participates nicely with the reloading facilities of Grails. When creating new services or exposing existing services, they will be registered in the Flex message broker without restarting the application
* Embedded BlazeDS libraries
* Embedded Flex Webtier Compiler - When installing this plugin it will automatically install the Flex Webtier Compiler to your web application (within the WEB-INF folder). In development mode this Webtier Compiler is automatically enabled.

Tags: Groovy Grails

Gert Wohlgemuth writes:

groovy on rails = grails = cool

Finally a webframework which just works. Not like appfuse, which turned out to be a nightmare or spring + spring mvc which was very nice, but the development was just too much xml configuration and so slowed me down a lot.

Grails on the other hand, not one single line of configuration yet. It just worked…

Tags: Groovy Grails

Kas Thomas of CMS Watch writes a thoughtful piece on the pros and cons of the new SpringSource Application Server.

Posted by Kas Thomas
Tuesday, May 13, 2008
5:41 PM

He begins with an overview:

The recently announced SpringSource Application Platform is (according to its creators) “a completely module-based Java application server that is designed to run enterprise Java applications and Spring-powered applications with a new degree of flexibility and reliability.” Spring geeks will recognize it as the long-awaited integration of Spring with OSGi.

The real value-add of OSGi comes in terms of lifecycle management of classes, cleaner isolation of code, and more thoroughgoing code reuse. With OSGi, there’s no need for every deployed web app to hide its own copy of xalan.jar (or whatever) under WEB-INF, as so often happens on J2EE appservers. A bundle gets exposed once, and the various apps that need to use that code can do so without getting caught in classloader hell.

More interesting is that bundles can be hot-swapped without breaking any running apps. You can update part of an app (just the bundles that need updating) without disturbing the rest of the app or having to bounce the server.

There are other benefits as well, but efficient code reuse and the ability to hot-swap code modules are core to what OSGi is about. Which may explain why WebSphere, WebLogic, JBoss, Jonas, and others are moving to (or already have moved to) OSGi-based architectures.

He covers the downside:

Still, there’s a down side to all the wonderfulness. New programming patterns are in play with OSGi (representing a new learning curve for developers), and overall complexity has not gone down; it has merely been shifted around. Also, some people are put off by the project’s GPLv3 license. (Spring itself will continue to use the Apache license, however.)

He concludes that it is a good thing:

My take? The OSGi-powered SpringSource Application Platform represents an important paradigm shift, one that has the potential to revitalize Java EE development (much as Spring itself did when it debuted on the first day of Spring in 2004). How? By raising expectations around code reuse, serviceability, reliability, remote management, hot upgrades that don’t break anything, version-based conflict resolution, and other difficult issues that (frankly) have long needed solving in order for Java EE development to go to the next level.

Tags: SpringSource

Joshua Lipton 05.12.08, 5:40 PM ET

After a very quick run up from its March 10 low, Wall Street wheezed its way into the red last week.

The Dow Jones Industrial Average gave up 2.4%, on the week, finishing at 12,745.88. Investors grew worried by more losses in the financial sector and crude’s continued march to record highs. Oil’s runaway price surge leaves investors concerned about whether the already soft U.S. economy might weaken even further under the pressure of higher oil and gas prices.

The best performing online investors, Marketocracy’s M100, have continued to emphasize energy in their portfolios. That has proven to be a wise bet. This earnings season, companies in the energy sector reported the highest earnings growth rate of any sector at 26%, according to Thomson Reuters.

Where does oil go from here? Last week, Goldman Sachs oil analyst Arjun Murti said that he thinks the price of oil could spike to $150-$200 a barrel over the next six to 24 months. Murti boasts some credibility on the issue: He was also the analyst that predicted back in March 2005, when oil traded at around $50 a barrel, that the price would super-spike to $105 a barrel.

Longtime market pro Ed Yardeni thinks $200 oil is unlikely as slowing economic activity around the globe ratchets down demand for oil. Yardeni says it would take a fairly serious supply disruption triggered by a geopolitical crisis to drive prices up to $200 a barrel.

“Admittedly, there is one in the works as tensions mount between the U.S. and Iran,” Yardeni writes.

The M100 certainly seem to think that investing in energy will continue to reward them with pleasing returns. A year ago, the M100’s energy holdings made up 13% of their combined portfolios. Now their holdings are approaching 25% of their overall portfolios.

The latest buy: Continental Resources, an oil and gas producer with operations in the Rocky Mountain, Mid-Continent and Gulf Coast regions of the United States. Last week, the company, which has a market capitalization of about $9 billion, reported that its profit skyrocketed 64% in the first quarter as oil prices climbed to new highs.

Continental Resources said it raked in $88 million, or 52 cents per share vs. $53.8 million, or 34 cents per share, in the first quarter of last year. That was enough to beat the Street’s expectations. Analysts had predicted profit of 49 cents per share.

Record energy prices continue to pad the company’s bottom line. The average price the company commanded for a barrel of oil jumped during the first quarter to $81.35 from $46.47 in the year-ago period.

The question now for the company is what to do with all this money from the boom times. Continental said it’s going to use some of the cash it is generating from higher energy prices to invest in more drilling. The company forecasts its production by the end of the year to increase 42% from its current production levels.

In Pictures: Five Buys, Five Sells

Continental Resources had enjoyed a monster run up. The stock has surged more than 277% in just the past 12 months. But our M100 think there is still more room to the upside here.

Compared to its direct competitors, Continental Resources is much more profitable with operating margins of 48.95% for the trailing 12 months. It’s also still very cheap relative to its expected earnings power, with a price-to-earnings growth ratio of just 0.47. (Anything less than one is considered a good deal.) The M100 carved out a big position.

Hedging their bets against a slowing economy, the M100 also decided it would be wise to pick up a classic recession-proof play. So the gurus looked to the consumer staples sector, where they decided it was time to push cash into candy maker Cadbury.

Last week, on May 7, Cadbury and Dr Pepper Snapple Group officially parted ways and began trading under individual tickers.

Analysts following Cadbury point out bullish reasons to own the stock: They write that the company leads the worldwide confectionery industry with 10% global share and competes in all three segments: chocolate, sugar and gum. There are also a lot of candy lovers across the pond: One-third of confectionery sales are in emerging markets.

Also, analysts write, Cadbury has proved it can expand its confectionery business not only in emerging markets but also through innovation (liquid-filled, sugar-free gum), new products (Stride) and expanded distribution of existing brands (Trident in the U.K.).

Finally, and perhaps most alluringly for opportunistic investors like our M100, the recent decision of rival Mars to purchase Wrigley for $23 billion puts pressure on Cadbury to do a deal of its own. The Wrigley acquisition will give Mars over $27 billion in sales. The standalone confectionery division could now look ripe for a takeover.

One possibility is that Hershey will feel the pressure from the Mars deal and reconsider a merger with Cadbury. Although the two firms have chatted about teaming up in the past, the Hershey Trust’s refusal to dilute its 78% control of voting rights in Hershey was an apparently insurmountable roadblock. (See: “Cadbury Climbs On Wrigley Deal“.)

Still, the M100 clearly believe that a deal getting done here remains a real possibility. They aggressively committed capital to the candy maker.

Other major buys for the M100 included silicon wafer maker MEMC Electronic Materials, oil and gas company Rosetta Resources and CryoLife, a biomaterials, medical device and tissue processing company.

On the sell side last week, the M100 bailed out of chip maker Sigma Designs.

Analysts explain that Sigma creates chip designs that power set-top boxes that receive, decode and reassemble IPTV signals. IPTV, which stands for Internet protocol television, delivers video to peoples’ homes via standard telephone lines. IPTV is common across the pond, in Europe and Asia, where there are low levels of cable TV penetration.

Morningstar analyst Eric Kobayashi-Solomon, who covers the company, notes that Sigma was one of the early pioneers in this specialized field, and it maintains more than 75% global market share in these semiconductor chips.

However, the analyst warned clients in a research note that he has twin concerns about Sigma: First, he says there are worries about whether Sigma, which has a market capitalization of just $540 million, can really compete against larger rivals like Broadcom.

Also, he points out that Sigma has been hindered by questions about options back-dating and has had to employ two different auditors and three different chief financial officer’s since early 2007.

“Our discussions with management lead us to believe that these issues are not deeper signs of malfeasance, but we recommend potential investors to consider their individual risk tolerance before investing in this firm,” Kobayashi-Solomon wrote.

Sigma’s stock hasn’t been an investor-pleaser. It’s down about 30% in the past year and 60% in the past six months. The M100 decided it was time to move on.

Other sells for the gurus included health care company Baxter International, insurance company National Atlantic Holdings, investment manager Legg Mason, and Rydex S&P Smallcap 600 Pure Value, an exchange-traded fund that tracks the performance of the S&P Smallcap 600/Citigroup Pure Value index.

Guru Buys

Continental Resources

Cadbury

MEMC Electronic Materials

Rosetta Resources

CryoLife

Guru Sells

Sigma Designs

Baxter International

National Atlantic Holdings

Legg Mason

Rydex S&P Smallcap 600 Pure Value

Marketocracy.com tracks more than 60,000 online stock portfolios. Of those, the top 100 performing portfolios, the M100, are used to create a real-life mutual fund, the Masters 100 Fund, which is managed by founder Ken Kam. Each week, Guru Picks analyzes the buys and sells of the M100. Click here for more information about Marketocracy.com and its money management services.

Tags: Marketocracy

From the AMIS Technology Blog:

Ironically, the best session of the day was one I did not want to attend. However, the queue for the OpenESB session was huge, so I escaped into the Grails session by Jeff Brown from G2One. And that was a very good presentation. The right pace, the right level of detail, demonstrations and clear explanations and a huge amount of enthusiasm. I am not a big fan of Grails, or at least I was not at the beginning of the  session, but Jeff was very persuasive.

Grails - to be found at http://grails.codehaus.org/ - are an American instrumental rock band from Portland, Oregon. Well that too, the Grails we are talking about here is a web application development platform, based on the Groovy scriptling language and open-source technologies like Spring, Hibernate, Quartz and SiteMesh. (see also http://dev2dev.bea.com/pub/a/2006/10/introduction-groovy-grails.html for an introduction to Groovy and Grails by Harshad Oak). One quotation from Harshad: Grails can do to Groovy what Ruby on Rails has done for Ruby. And that is offer a ‘coding by convention’ approach that allows extremely fast first cut CRUD application development. In almost less than no-time you will have a not too bad looking CRUD (create, retrieve, update and delete) application for your domain objects. And where to me Ruby and Ruby on Rails are pretty alien technologies, Grails is much more friendly.

Groovy is one of the many scripting languages around that have attracted so much attention in recent years, together with Python, Ruby, Perl, (server side) JavaScript, PHP (?) and others. Groovy has been inspired by SmallTalk, Ruby and Python. One thing that makes Groovy attractive - although JRuby provides something very similar - is that it has been created for the JVM. In the words of Harshad: “The Java platform is concerned only with getting bytecodes to execute. As such, the platform does not force you to use the Java language. As long as you provide bytecodes, things will work. Groovy compiles to bytecodes, and it makes no difference to the Java platform if the bytecodes were generated from code written in Java or Groovy.”

This also makes integration between Groovy components and Java code very easy to accomplish: at run time they are one and the same thing (classes full of byte code the JVM can interpret). I was talking to Jeroen from Xebia at the NLJUG party and he explained to me how he used Groovy to quickly (3 hours) implement functionality that read from 9 different CVS files and merged them together into an XML file written out to the file system; he estimated that doing the same thing in Java would have taken two days or longer. Still integrating this work into the Java application his project was working on was a piece of cake!

Some key phrases on Groovy:

• is an agile and dynamic language (partly interpreted at run-time) for the Java Virtual Machine
• makes modern programming features (builders, dynamic typing and, yes, closures aka anonymous functions) available to Java developers with almost-zero learning curve
• supports Domain-Specific Languages and other compact syntax so your code becomes easy to read and maintain
• makes writing shell and build scripts easy with its powerful processing primitives, OO abilities and an Ant DSL
• simplifies testing by supporting unit testing and mocking out-of-the-box
• seamlessly integrates with all existing Java objects and libraries

Note: Groovy is picked by Oracle as the language to use for writing complex validation rules for ADF Business Components (see http://radio.weblogs.com/0118231/stories/2007/05/08/jdeveloperadf11gTechnicalPreviewTipsAndTricks.html and search for Groovy) and for command line access to the Enterprise Manager (if I remember this correctly, or was it Jython picked for this?).

Groovy has the concept of a GSP, the counterpart to the JSP. Building web applications with Groovlets and GSPs is similar to developing Servlets and JSPs (you guessed it) and can be used more or less interchangeably.

Jeff demonstrated in a smooth and inspiring way how he created a Grails application:

• create Person class and an associated controller which initially is ’scaffold’ (generate plain CRUD support)
• generate Grails application, including data storage in in-memory HSQL database
• run application in Jetty container

these steps took less than 3 minutes and if he had not been talking he could have managed in under 90 seconds I believe.

He then showed how easy it is to implement find methods - the query is interpreted from the method name, such as findAllByAgeLessThan() - and define special URL mapping. Grails leverages Hibernate Query facilities for data retrieval, which makes it quite powerful and flexible. And as long as your requirements fit in the boundaries of Grails out of the box, you have tremendous functionality. And I have to admit that the fun in developing, that Scripting language adepts always profess in a somewhat over the top way, started to get a hold over me. It really looked like fun, primarily I suppose because of the speed and ease with which some non trivial features could be realized. Jeff demonstrated the concept of GSP Tag Libraries - smooth and simple, especially when compared to JSP tag libraries.

Tags: Groovy Grails

We all dream of finding the next Warren Buffet. But even Warren Buffet is having trouble finding the next Warren Buffet. And, he’s not the only one having trouble. Out of over 11,000 mutual funds, almost 70% have replaced their managers in the last 5 years. That’s a pretty high failure rate. The scarcity of investment talent is the perhaps the single biggest reason why there are so few mutual funds that I found worth recommending as a core holding.  Click here for the list

Actually, there is a good reason why there are so few great investors. When it comes to investing,  mistakes can cost thousands of dollars. Since everyone is bound to make mistakes when they are getting started, it is hard to get enough practice to become a great investor without going broke in the process. If the same was true of golf, there would be just as few great golfers as there are great investors.

The truth is that beginning investors should be just as cautious about trading with real money as a beginning pilot would be about his first solo flight. That is why I recommend that investors practice with a model portfolio before putting their real money at risk. To start now, click here. More than 100,000 people have set up a model portfolio at Marketocracy. And, over 30,000 have track records that are now more than 5 years old. We have signed research contracts with about 500 of them. This is the talent pool from which we choose our m100 team.

The reason so few core funds even exist is because no single investor has the expertise to do well in every industry. Consequently, in order to provide diversification and still have a chance to outperform the S&P 500, you need more than just one skilled investor, you need a team. That’s why I would rather have the m100 as my team instead of just hiring the one person with the best track record. Because we have so many skilled investors under contract with us, we are better able to run a core fund than almost any other firm.

If a fund could beat the S&P 500 every day, month, quarter, and year, it would be  easy to recommend it as a core holding. Of course, no one can promise that but it is a goal all core fund managers should strive for.  To measure our progress towards this goal, we use a metric we call the success ratio — the percentage of all of the days over a period of time when the m100 beat the S&P 500 after a specified holding period. For the last 3 years, here are the m100’s success ratios for various holding periods.

Holding Period     Success Ratio
1 month                59%
1 Quarter              67%
1 Year                73%
2 Years                96%

Since 2005, the m100 had a 59% chance of beating the S&P 500 after a holding period of just 1 month. With a holding period of 1 quarter there was a 67% chance of beating the S&P 500. The longer the holding period, the more likely it was that the m100 did better than an S&P 500 index fund. I would never recommend that anyone with a time horizon of 1 month, or even 1 quarter, invest in stocks. But for those with an investment horizon of at least 2 years, I think the m100 is a great team for a core portfolio.

Keep in mind that these statistics are for the m100 not the Masters 100 Fund. Even if the m100 does well, I am the Fund’s manager and I could still screw it up. However, over the weekend, Morningstar upgraded our Fund to 4 stars overall, and 5 stars for the past 3 years. So, I haven’t screwed things up too badly — at least not in the last 3 years!

Tags: Marketocracy

Petitt Funds (a blog run by a Marketocracy Top 10 member) writes:

Cool!

The mutual fund that is run pursuant to the selections of the Marketocracy organization that I have been a part of for the last 5 years has just been upgraded by Morningstar to a 4-star fund (5-stars for the last 3 years!)

This should have happened sooner, except for a bad year a few years back–which was when Marketocracy took another look at how they were going to be making future selections. They had been buying hundreds and hundreds of stocks based on the selections of their Top 100 investors, and after their bad year started limiting their purchases to those recommended by only the Top 10 investors–which group I have belonged to for the last 3 years. Most of the stocks I have recommended here have ended up being holdings of the mutual fund.

While I have been through a less-than-stellar year since late last summer, if you visit the Marketocracy site you are going to see incredible performances by the other members of the “m10″ (what Marketocracy calls their Top Ten). Hopefully, I’m just pausing to catch my breath…

Anyway, it is exciting to see this experiment starting to pay off for the Marketocracy bunch. I’m going to encourage my kids to put some of their Roth IRA money into the fund.

FULL DISCLOSURE: As a member of the m10, I get a tiny percentage of the “Assets Under Management” each quarter–so of course I may be encouraging all of you to invest there out of sheer greed! Take anything I say with a grain of salt. Furthermore, past performance is no guarantee of future results (I think I read that somewhere…) Oh, yeah–and the Marketocracy site and the Marketocracy Masters 100 Fund are two separate and unrelated entities, blah, blah, and anything else I’m supposed to say to keep the SEC at bay.

Tags: Marketocracy

Larry Macdonald at The Globe and Mail writes:

IAN ST. MARTIN

AGE: 43

OCCUPATION: Software engineer turned professional investor.

PORTFOLIO: Astea International Inc., WPCS International Inc., Optelecom-NKF Inc., Ceradyne Inc., Excel Maritime Carriers Ltd., Span-America Medical Systems Inc. and lots of cash. Mr. St. Martin’s portfolio is very fluid and may be different from when he described it as of March 31.

INVESTMENT RESULTS

Mr. St. Martin, who resides in Vancouver, has a virtual portfolio on Marketocracy.com that has long been in the top 100 of more than 50,000 portfolios tracked on the U.S. website. Although growth has tapered off in the past year, the portfolio has an annualized return of 32.2 per cent since inception in May of 2001, compared with 2.6 per cent in the S&P 500 over the same period.

HOW HE STARTED

“I started dabbling in stocks in the 1990s, when I started to have some extra income from my job,” Mr. St. Martin says. “However, I never took it seriously until after the crash of March, 2000. That event led me to a much deeper investigation of the market. I wanted to see if I could find any rhyme or reason to the seemingly wild gyrations of the market.”

HOW HE INVESTS

“My search took me to William O’Neil [the founder of Investor’s Business Daily] and his CAN SLIM system. From there, I developed my own style,” he adds. The new approach proved to be enough of a winner to help him land a position as chief research analyst with Vancouver-based Asset Logics U.S. Long-Short Equity Fund (until February of this year).

He screens the earnings reports of public U.S. companies daily, looking for strong revenue and earnings growth, increasing margins, robust balance sheets, and modest valuations when compared to peers. For companies meeting his criteria, he looks at their press releases and filings to see if growth is sustainable.

That leaves a smaller number of prospects, all of which go on to a watch list. He’ll pounce if he sees a spike in trading volume and an upside price move - especially if valuation is still reasonable.

The decision to buy or sell is also informed by the current state of the market. “I don’t try to predict changes in the market trend, but I want to understand where it is right now so that I don’t fight the trend,” Mr. St. Martin said.

Tags: Marketocracy