With the recent run up of the markets over the past few months, I have decided to take a look at my real money position in Alliance Resource Partners LP. I purchased this stock on 2/27/2007 (the 500 point down day for the Dow) for the price of $35.22 a share. Since this time the stock has risen a considerable amount to $43.48 a share as of the close on 5/25/07. My investment in ARLP has given me a return over twenty percent in a very short time frame, and at this point I feel that it is wise to reevaluate this position and determine if it is time to sell and realize my gains or if I should continue holding the stock.

First, I will review the reasons why I bought this stock. I originally purchased ARLP while I was anticipating a market downturn and I wanted a stock that had a sizable dividend and good cash flow to back it up. At that time, Alliance Resource Partners had both of these qualities, along with being in the Monthly Top 25 stock screen that ValueStockReports.com runs. With these traits, I decided to further investigate Alliance Resource Partners and after reading the 10-Qs and many analysts’ reports I decided that it was a company that would be able to weather a downward move by the markets. Fast forward to the present, and we see that the downward move never came but my conservative pick is up over twenty percent.

Now that I am reviewing Alliance Resource Partners again, I will start with what has not changed over the past few months. First, the company still pays a big cash dividend of over 5%. The second reason for investing was the strong cash flow. The cash flow has improved since the time that I made my purchase, but because of the increase in the price of the stock I feel that ARLP has lost the margin of safety that it had before. At the time of my purchase of the stock I had an overall price target of around $43.25 per share for ARLP.

Now after their latest earnings report, that price target has increased slightly up to $45 dollars a share, and given that the stock has quickly moved from $35 a share to $43, I will be selling ARLP once the stock hits $45.