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Tuesday, July 18, 2006

Insider Buying at UAP Holding (UAPH) & Selling at Netflix (NFLX)

By Yaser Anwar, CSC of Stock Market Beat

BUYING: UAP Holding Corp (UAPH), Date of Trade: 7/13/06 & Average Price: $18.48

UAPH earlier this month committed the cardinal sin of disappointing analysts, who dislike nothing more than being made to look foolish. They, not UAPH, had been forecasting earnings of $1.47 cents a share for 2007.

Instead, while posting higher first quarter profits, it said it expects earnings of between $1.25 and $1.40 a share, and UAPHs shares promptly slumped by over 10%. But while all around him were sulking, Merrill Lynch analyst Steve Byrne, though lowering his 07 estimate, said the shares could gain in the coming months, driven by a rebound in demand for fertilizer this fall.

The outlook for expanding U.S. corn acreage is favorable for UAPH, as corn accounts for a disproportionately large amount of U.S. demand for fertilizers, seeds and crop production chemicals.

Byrne maintained his Buy rating for UAPH with a $25 price target. Insider Moves recommends following his advice, as did one of the companys key directors Carl Rickertsen, who last week spent $221,820 of his own money buying 12,000 shares at $18.48 each.

SELLING: Netflix, Inc (NFLX), Date of Trade: 7/13/06 & Average Price: $24.36

NFLX shares plunged 80% after video-store giant Blockbuster entered the online business in '04. But it roared back in 2005 with sales rising 36% and profits doubling to $40 million. And NFLX is branching into film distribution, buying rights to 140 films in an effort to boost the market for smaller films its 5 million subscribers it hopes for 20 million by 2010 to 2012 choose more often than new releases.

But Hollywood is now doing more deals allowing movies to be downloaded over the Web, and many others are copying the NFLX model. And dont ignore the cost of mailing, which is rising rather more frequently these days.

Is Reed Hastings, NFLX chairman and CEO worried, or just becoming a bit nervous about the onslaught on his market? Is that why he recently pocketed $243,600 by selling 10,000 shares at $24.36 each.

Or maybe he thinks the Forward PE of 25.20 is somewhat optimistic? Either way, when Reed Hastings is selling NFLX stock, perhaps the rest of us should be wary.

Sources: IM & SEC Filings

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