n30b2_33111.htm - Generated by SEC Publisher for SEC Filing

 

                  A Closed-End Investment Company
                     listed on the New York Stock Exchange

                                100 PARK AVENUE
                             NEW YORK • NY 10017
                        212-916-8400 • 1-800-436-8401
                    E-mail: InvestorRelations@gainv.com
                     www.generalamericaninvestors.com

 

For the three months ended March 31, 2011, the In the last quarter, equity markets continued to 
net asset value per Common Share increased  advance together with the expanding economy, and 
5.6%, while the investment return to our  General American’s portfolio kept pace. These gains 
stockholders increased by 5.7%. By comparison, our  were realized despite the volatility imparted by unrest 
benchmark, the Standard & Poor’s 500 Stock Index  in the Middle East and North Africa, with the atten- 
(including income), increased 5.9%. For the twelve  dant rise in oil prices, and the volcanic activity cen- 
months ended March 31, 2011, the return on the net  tered on The Ring of Fire, with its tragic consequence 
asset value per Common Share increased by 15.6%,  for the Japanese people and economy. 
and the return to our stockholders increased by 16.3%;   
these compare with an increase of 15.6% for the S&P  While housing activity remains at anemic levels and 
500. During both periods, the discount at which our  businesses face supply chain disruptions resulting 
shares traded continued to fluctuate and on March 31,  from the Japanese disaster, we remain positive in 
2011, it was 14.1%.  regard to the economy and the equity markets. The 
  former is buoyed by ongoing improvement in the 
As detailed in the accompanying financial statements  labor market, and the latter by easy money and rea- 
(unaudited), as of March 31, 2011, the net assets  sonable valuations, among other reasons. 
applicable to the Company’s Common Stock were   
$1,003,834,212 equal to $33.01 per Common Share.  Information about the Company, including our 
  investment objectives, operating policies and 
The increase in net assets resulting from operations  procedures, investment results, record of dividend 
for the three months ended March 31, 2011 was  and distribution payments, financial reports and press 
$53,320,198. During this period, the net realized  releases, is on our website and has been updated 
gain on investments sold was $6,911,560, and  through March 31, 2011. It can be accessed on the 
the increase in net unrealized appreciation was  internet at www.generalamericaninvestors.com. 
$49,315,937. Net investment loss for the   
three months was $79,306, and distributions to  By Order of the Board of Directors, 
Preferred Stockholders amounted to $2,827,993.  GENERAL AMERICAN INVESTORS COMPANY, INC. 
During the three months, 15,075 shares of the  Spencer Davidson 
Company’s Common Stock were repurchased for  Chairman of the Board 
$426,922 at an average discount from net asset value  President and Chief Executive Officer 
of 13.5%.   
  April 13, 2011 

 



      Value 
Shares  COMMON STOCKS    (note 1a) 
AEROSPACE/DEFENSE (2.7%)     
325,000  United Technologies Corporation  (Cost $22,957,205)  $27,511,250 
BUILDING AND REAL ESTATE (1.6%)     
1,816,755  CEMEX, S.A. de C.V. ADR* (a)  (Cost $20,795,951)  16,223,624 
COMMUNICATIONS AND INFORMATION SERVICES (6.6%)     
960,000  Cisco Systems, Inc. (a)    16,464,000 
300,000  MSCI Inc. Class A (a)    11,046,000 
700,000  QUALCOMM Incorporated    38,381,000 
    (Cost $47,448,301)  65,891,000 
COMPUTER SOFTWARE AND SYSTEMS (8.8%)     
60,000  Apple Inc. (a)    20,910,450 
1,015,000  Dell Inc. (a)    14,727,650 
770,000  Microsoft Corporation    19,550,300 
55,000  Nintendo Co., Ltd.    14,932,938 
360,000  Teradata Corporation (a)    18,252,000 
    (Cost $80,719,797)  88,373,338 
CONSUMER PRODUCTS AND SERVICES (10.7%)     
350,000  Diageo plc ADR*    26,677,000 
450,000  Nestle S.A.    25,988,963 
325,000  PepsiCo, Inc.    20,933,250 
206,000  Towers Watson & Co. Class A    11,424,760 
700,495  Unilever N.V.    22,101,647 
    (Cost $80,978,527)  107,125,620 
ENVIRONMENTAL CONTROL (INCLUDING SERVICES) (5.2%)     
957,100  Republic Services, Inc.    28,751,284 
630,000  Waste Management, Inc.    23,524,200 
    (Cost $39,190,474)  52,275,484 
FINANCE AND INSURANCE (24.4%)     
BANKING (3.9%)       
500,000  Bond Street Holdings LLC (a) (b)    10,000,000 
425,000  JPMorgan Chase & Co.    19,592,500 
110,000  M&T Bank Corporation    9,731,700 
    (Cost $27,690,799)  39,324,200 
INSURANCE (11.8%)       
315,000  Arch Capital Group Ltd. (a)    31,244,850 
245,000  Everest Re Group, Ltd.    21,604,100 
525,000  Fidelity National Financial, Inc.    7,418,250 
37,500  Forethought Financial Group, Inc. Class A with Warrants (a) (c)    7,500,000 
325,000  MetLife, Inc.    14,537,250 
260,000  PartnerRe Ltd.    20,602,400 
83,000  Transatlantic Holdings, Inc.    4,039,610 
200,000  The Travelers Companies, Inc.    11,896,000 
    (Cost $55,887,335)  118,842,460 
OTHER (8.7%)       
375,000  American Express Company    16,950,000 
330,492  Aon Corporation    17,502,856 
110  Berkshire Hathaway Inc. Class A (a)    13,783,000 
1,666,667  Epoch Holding Corporation    26,300,005 
590,000  Nelnet, Inc.    12,879,700 
    (Cost $39,167,898)  87,415,561 
    (Cost $122,746,032)  245,582,221 

 




      Value 
Shares  COMMON STOCKS (continued)    (note 1a) 
HEALTH CARE / PHARMACEUTICALS (7.1%)     
200,000  Celgene Corporation (a)    $11,515,000 
262,100  Cephalon, Inc. (a)    19,940,568 
529,900  Cytokinetics, Incorporated (a)    789,551 
564,500  Gilead Sciences, Inc. (a)    23,974,315 
755,808  Pfizer Inc.    15,350,460 
195,344  Poniard Pharmaceuticals, Inc. (a)    81,849 
    (Cost $64,607,847)  71,651,743 
MACHINERY AND EQUIPMENT (4.9%)     
1,200,000  ABB Ltd. ADR*    29,028,000 
900,000  The Manitowoc Company, Inc.    19,692,000 
    (Cost $23,703,922)  48,720,000 
METALS AND MINING (2.0%)     
224,200  Alpha Natural Resources, Inc. (a)    13,310,754 
150,000  Nucor Corporation    6,903,000 
    (Cost $16,054,563)  20,213,754 
MISCELLANEOUS (5.1%)     
  Other (d)  (Cost $55,806,597)  51,355,262 
OIL AND NATURAL GAS (INCLUDING SERVICES) (14.8%)     
296,478  Apache Corporation    38,814,900 
300,000  Canadian Natural Resources Limited    14,829,000 
130,062  Devon Energy Corporation    11,935,790 
725,000  Halliburton Company    36,134,000 
2,050,000  Weatherford International Ltd. (a)    46,330,000 
    (Cost $74,191,385)  148,043,690 
RETAIL TRADE (16.5%)     
575,000  Costco Wholesale Corporation    42,159,000 
400,000  J.C. Penney Company, Inc.    14,364,000 
331,000  Target Corporation    16,553,310 
1,512,400  The TJX Companies, Inc.    75,211,652 
333,000  Wal-Mart Stores, Inc.    17,332,650 
    (Cost $71,856,319)  165,620,612 
SEMICONDUCTORS (2.6%)     
575,000  ASML Holding N.V.  (Cost $13,463,950)  25,587,500 
TECHNOLOGY (3.2%)       
750,000  International Game Technology    12,172,500 
1,900,000  Xerox Corporation    20,235,000 
    (Cost $34,368,474)  32,407,500 
TOTAL COMMON STOCKS (116.2%)  (Cost $768,889,344)  1,166,582,598 
Warrants  WARRANT     
BANKING (0.3%)       
175,000  JPMorgan Chase & Co., expires 10/28/2018 (a)  (Cost $2,234,226)  2,936,500 

 




      Value 
Shares  SHORT-TERM SECURITY AND OTHER ASSETS    (note 1a) 
17,624,536  SSgA Prime Money Market Fund (1.8%)  (Cost $17,624,536)  $17,624,536 
TOTAL INVESTMENTS (e) (118.3%)  (Cost $788,748,106)  1,187,143,634 
Cash, receivables and other assets less liabilities (0.6%)    6,807,753 
PREFERRED STOCK (-18.9%)    (190,117,175) 
NET ASSETS APPLICABLE TO COMMON STOCK (100%)    $1,003,834,212 
* ADR - American Depository Receipt     
(a) Non-income producing security.     
(b) Level 3 fair value measurement, restricted security acquired 11/4/09, aggregate cost $10,000,000, unit cost and fair value is $20 per share, note 2. Fair 
    value is based upon dated bid and transaction prices provided via the NASDAQ OMX Group, Inc. PORTAL Alliance trading and transfer system for 
    privately placed equity securities traded in the over-the-counter market among qualified investors and an evaluation of book value per share. 
(c) Level 3 fair value measurement, restricted security acquired 11/3/09, aggregate cost $7,500,000, unit cost and fair value is $200 per share, note 2. Fair 
    valuation is based upon a market approach using valuation metrics (market price-earnings and market price-book value multiples), and changes therein, 
    relative to a peer group of companies established by the underwriters.     
(d) Securities which have been held for less than one year, not previously disclosed, and not restricted.   
(e) At March 31, 2011: the cost of investments for Federal income tax purposes was the same as the cost for financial reporting purposes, aggregate gross 
    unrealized appreciation was $427,452,997, aggregate gross unrealized depreciation was $29,057,469, and net unrealized appreciation was $398,395,528. 

 


Contracts      Value 
(100 shares each)  COMMON STOCK/EXPIRATION DATE/EXERCISE PRICE  (note 1a) 
CONSUMER PRODUCTS AND SERVICES     
209  Visteon Corporation/June 2011/$70.00  (Premium Deposited with Broker $163,590)  $190,190 
(see notes to financial statements)     

 




    SHARES  SHARES 
INCREASES  TRANSACTED  HELD   
NEW POSITIONS     
  Canadian Natural Resources Limited  50,000  300,000  (b)
  Target Corporation  331,000  331,000 
  Towers Watson & Co. Class A  —  206,000  (b)
ADDITIONS     
  MetLife, Inc.  50,000  325,000 
  PepsiCo, Inc.  10,000  325,000 
  Unilever N.V.  45,578  700,495 
DECREASES     
ELIMINATIONS     
  Alexander & Baldwin, Inc.  189,762  — 
  NetEase.com, Inc.  168,100  — 
REDUCTIONS     
  CEMEX, S.A. de C.V. ADR  130,125  1,816,755 
  Cephalon, Inc.  120,000  262,100 
  Fidelity National Financial, Inc.  175,000  525,000 
  Halliburton Company  55,000  725,000 
  The Manitowoc Company, Inc.  100,000  900,000 
  The TJX Companies, Inc.  120,000  1,512,400 
  Wal-Mart Stores, Inc.  217,000  333,000 
  Weatherford International Ltd.  100,000  2,050,000 
(a)  Common shares unless otherwise noted; excludes transactions in Common Stocks - Miscellaneous - Other.   
(b)  Shares purchased in prior period and previously carried under Common Stocks - Miscellaneous - Other.   

 


The diversification of the Company’s net assets applicable to its Common Stock by industry group as of March 31, 2011 is shown in the following table.

PERCENT COMMON
INDUSTRY CATEGORY  COST(000)  VALUE(000)  NET ASSETS* 
Finance and Insurance       
Banking  $29,925  $42,261  4.2% 
Insurance  55,887  118,842  11.8 
Other  39,168  87,416  8.7 
  124,980  248,519  24.7 
Retail Trade  71,856  165,620  16.5 
Oil and Natural Gas (Including Services)  74,191  148,044  14.8 
Consumer Products and Services  80,979  107,126  10.7 
Computer Software and Systems  80,720  88,373  8.8 
Health Care/Pharmaceuticals  64,608  71,652  7.1 
Communications and Information Services  47,448  65,891  6.6 
Environmental Control (Including Services)  39,191  52,275  5.2 
Miscellaneous**  55,807  51,355  5.1 
Machinery and Equipment  23,704  48,720  4.9 
Technology  34,368  32,408  3.2 
Aerospace/Defense  22,957  27,511  2.7 
Semiconductors  13,464  25,588  2.6 
Metals and Mining  16,055  20,214  2.0 
Building and Real Estate  20,796  16,224  1.6 
  771,124  1,169,520  116.5 
Short-Term Securities  17,624  17,624  1.8 
Total Investments  $788,748  1,187,144  118.3 
Other Assets and Liabilities - Net    6,807  0.6 
Preferred Stock    (190,117)  (18.9) 
Net Assets Applicable to Common Stock    $1,003,834  100.0% 
* Net Assets applicable to the Company’s Common Stock.     
** Securities which have been held for less than one year, not previously disclosed, and not restricted.   
(see notes to financial statements)       

 




ASSETS       
INVESTMENTS, AT VALUE (NOTE 1a)     
  Common stocks (cost $768,889,344)    $1,166,582,598 
  Warrant (cost $2,234,226)    2,936,500 
  Money market fund (cost $17,624,536)    17,624,536 
       Total investments (cost $788,748,106)    1,187,143,634 
RECEIVABLES AND OTHER ASSETS     
  Cash held by custodian in segregated account*  $1,536,247   
  Receivable for securities sold  8,105,031   
  Dividends, interest and other receivables  1,263,528   
  Qualified pension plan asset, net excess funded (note 7)  3,887,211   
  Prepaid expenses and other assets  2,417,498  17,209,515 
TOTAL ASSETS    1,204,353,149 
LIABILITIES       
  Payable for securities purchased  979,297   
  Accrued preferred stock dividend not yet declared  219,955   
  Outstanding option written, at value (premium received $163,590)  190,190   
  Accrued supplemental pension plan liability (note 7)  3,783,387   
  Accrued supplemental thrift plan liability (note 7)  3,398,808   
  Accrued expenses and other liabilities  1,830,125   
TOTAL LIABILITIES    10,401,762 
5.95% CUMULATIVE PREFERRED STOCK, SERIES B -     
     7,604,687 shares at a liquidation value of $25 per share (note 5)    190,117,175 
NET ASSETS APPLICABLE TO COMMON STOCK - 30,408,219 shares (note 5)    $1,003,834,212 
NET ASSET VALUE PER COMMON SHARE    $33.01 
NET ASSETS APPLICABLE TO COMMON STOCK       
  Common Stock, 30,408,219 shares at par value (note 5)  $30,408,219   
  Additional paid-in capital (note 5)  572,507,548   
  Undistributed net investment income (note 5)  3,642,198   
  Undistributed realized gain on investments  6,776,248   
  Accumulated other comprehensive income (note 7)  (4,820,981)   
  Unallocated distributions on Preferred Stock  (3,047,948)   
  Unrealized appreciation on investments  398,368,928   
NET ASSETS APPLICABLE TO COMMON STOCK    $1,003,834,212 
* Collateral for option written.     
(see notes to financial statements)     

 




INCOME       
Dividends (net of foreign withholding taxes of $97,424)  $3,677,139   
Interest  8,931  $3,686,070 
EXPENSES     
Investment research  2,258,677   
Administration and operations  799,102   
Office space and general  415,540   
Directors’ fees and expenses  71,140   
Auditing and legal fees  68,500   
Miscellaneous taxes  63,672   
Transfer agent, custodian and registrar fees and expenses  45,203   
Stockholders’ meeting and reports  43,542  3,765,376 
NET INVESTMENT LOSS    (79,306) 
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1, 3 AND 4)       
Net realized gain on investments:     
Securities transactions (long-term, except for $586,685)  6,911,560   
Net increase in unrealized appreciation on investments  49,315,937   
NET GAIN ON INVESTMENTS    56,227,497 
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS    (2,827,993) 
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS    $53,320,198 

 


  Three Months Ended  Year Ended 
OPERATIONS  March 31, 2011    December 31, 2010 
Net investment income (loss)  ($79,306)  $5,626,730 
Net realized gain on investments  6,911,560  19,636,107 
Net increase in unrealized appreciation  49,315,937  109,245,534 
  56,148,191  134,508,371 
Distributions to Preferred Stockholders:     
From net investment income  —  (2,112,684) 
From short-term capital gains  —  (878,926) 
From long-term capital gains  —  (8,320,362) 
Unallocated distributions  (2,827,993)  — 
Decrease in net assets from Preferred distributions  (2,827,993)  (11,311,972) 
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS  53,320,198  123,196,399 
OTHER COMPREHENSIVE INCOME - Funded status of defined benefit plans (note 7)  —  44,177 
DISTRIBUTIONS TO COMMON STOCKHOLDERS       
From net investment income  —  (2,427,967) 
From short-term capital gains  —  (1,010,091) 
From long-term capital gains  —  (9,562,040) 
DECREASE IN NET ASSETS FROM COMMON DISTRIBUTIONS  —  (13,000,098) 
CAPITAL SHARE TRANSACTIONS (NOTE 5)       
Value of Common Shares issued in payment of dividends and distributions  —  7,219,220 
Cost of Common Shares purchased  (426,922)  (30,842,134) 
DECREASE IN NET ASSETS - CAPITAL TRANSACTIONS  (426,922)  (23,622,914) 
NET INCREASE IN NET ASSETS  52,893,276  86,617,564 
NET ASSETS APPLICABLE TO COMMON STOCK       
BEGINNING OF PERIOD  950,940,936  864,323,372 
END OF PERIOD (including undistributed net investment income of $3,642,198 and     
$3,721,504, respectively)  $1,003,834,212  $950,940,936 
(see notes to financial statements)     

 




The following table shows per share operating performance data, total investment return, ratios and supplemental data for the three 
months ended March 31, 2011 and for each year in the five-year period ended December 31, 2010. This information has been derived 
from information contained in the financial statements and market price data for the Company’s shares.       
  Three Months           
  Ended           
  March 31, 2011  Year Ended December 31,
  (Unaudited)  2010    2009    2008    2007    2006 
PER SHARE OPERATING PERFORMANCE             
  Net asset value, beginning of period  $31.26  $27.50  $21.09  $38.10  $40.54  $39.00 
    Net investment income  —  .19  .11  .42  .31  .34 
    Net gain (loss) on securities -             
      realized and unrealized  1.84  4.37  6.94  (16.15)  3.39  4.72 
    Other comprehensive income  —  —  .07  (.25)  .02  .03 
  1.84  4.56  7.12  (15.98)  3.72  5.09 
  Distributions on Preferred Stock:             
    Dividends from net investment income  —  (.07)  (.11)  (.11)  (.02)  (.04) 
    Distributions from net short-term capital gains  —  (.03)  (.05)  —  (.03)  (.01) 
    Distributions from net long-term capital gains  —  (.27)  (.19)  (.27)  (.36)  (.36) 
    Distributions from return of capital  —  —  (.01)  —  —  — 
    Unallocated  (.09)  —  —  —  —  — 
  (.09)  (.37)  (.36)  (.38)  (.41)  (.41) 
  Total from investment operations  1.75  4.19  6.76  (16.36)  3.31  4.68 
  Distributions on Common Stock:             
    Dividends from net investment income  —  (.08)  (.10)  (.19)  (.33)  (.29) 
    Distributions from net short-term capital gains  —  (.03)  (.05)  —  (.38)  (.04) 
    Distributions from net long-term capital gains  —  (.32)  (.19)  (.46)  (5.04)  (2.81) 
    Distributions from return of capital  —  —  (.01)  —  —  — 
  —  (.43)  (.35)  (.65)  (5.75)  (3.14) 
  Net asset value, end of period  $33.01  $31.26  $27.50  $21.09  $38.10  $40.54 
  Per share market value, end of period  $28.34  $26.82  $23.46  $17.40  $34.70  $37.12 
TOTAL INVESTMENT RETURN - Stockholder             
      return, based on market price per share  5.67%  * 16.24%  36.86%  (48.20%)  8.72%  16.78% 
RATIOS AND SUPPLEMENTAL DATA             
  Net assets applicable to Common Stock,             
    end of period (000’s omitted)  $1,003,834     $950,941  $864,323  $674,598      $1,202,923    $1,199,453 
  Ratio of expenses to average net assets             
    applicable to Common Stock  1.57% **  1.54%  1.93%  0.87%  1.11%  1.06% 
  Ratio of net income to average net assets             
    applicable to Common Stock  (0.04%)  ** 0.66%  0.46%  1.31%  0.78%  0.86% 
  Portfolio turnover rate  4.61%  * 18.09%  24.95%  25.52%  31.91%  19.10% 
PREFERRED STOCK             
  Liquidation value, end of period (000’s omitted)  $190,117     $190,117  $190,117  $199,617  $200,000  $200,000 
  Asset coverage  628%  600%  555%  438%  701%  700% 
  Liquidation preference per share  $25.00  $25.00  $25.00  $25.00  $25.00  $25.00 
  Market value per share  $25.30  $24.95  $24.53  $21.90  $21.99  $24.44 
  *Not annualized             
  **Annualized             
(see notes to financial statements)             

 




1. SIGNIFICANT ACCOUNTING POLICIES - General American Investors Company, Inc. (the “Company”), established in 1927, is registered 
under the Investment Company Act of 1940 as a closed-end, diversifi ed management investment company. It is internally managed 
by its offi cers under the direction of the Board of Directors. 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires 
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying 
notes. Actual results could differ from those estimates. 
a. SECURITY VALUATION Equity securities traded on a national securities exchange are valued at the last reported sales price on 
the last business day of the period. Equity securities reported on the NASDAQ national market are valued at the offi cial closing 
price on that day. Listed and NASDAQ equity securities for which no sales are reported on that day and other securities traded 
in the over-the-counter market are valued at the last bid price (asked price for options written) on the valuation date. Equity 
securities traded primarily in foreign markets are valued at the closing price of such securities on their respective exchanges or 
markets. Corporate debt securities, domestic and foreign, are generally traded in the over-the-counter market rather than on a 
securities exchange. The Company utilizes the latest bid prices provided by independent dealers and information with respect 
to transactions in such securities to determine current market value. If, after the close of foreign markets, conditions change 
signifi cantly, the price of certain foreign securities may be adjusted to refl ect fair value as of the time of the valuation of the port- 
folio. Investments in money market funds are valued at their net asset value. Special holdings (restricted securities) and other 
securities for which quotations are not readily available are valued at fair value determined in good faith pursuant to procedures 
established by and under the general supervision of the Board of Directors. 
b. OPTIONS The Company may purchase and write (sell) put and call options. The Company typically purchases put options or writes 
call options to hedge the value of portfolio investments while it typically purchases call options and writes put options to obtain equity 
market exposure under specifi ed circumstances. The risk associated with purchasing an option is that the Company pays a premium 
whether or not the option is exercised. Additionally, the Company bears the risk of loss of the premium and a change in market 
value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner 
as portfolio securities. Premiums received from writing options are reported as a liability on the Statement of Assets and Liabilities. 
Those that expire unexercised are treated by the Company on the expiration date as realized gains on written option transactions 
in the Statement of Operations. The difference between the premium received and the amount paid on effecting a closing purchase 
transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for 
the closing purchase transaction, as a realized loss on written option transactions in the Statement of Operations. If a call option is 
exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Company has 
realized a gain or loss on investments in the Statement of Operations. If a put option is exercised, the premium reduces the cost basis 
for the securities purchased by the Company and is parenthetically disclosed under cost of investments on the Statement of Assets and 
Liabilities. The Company as writer of an option bears the market risk of an unfavorable change in the price of the security underlying 
the written option. See Note 4 for written option activity. 
c. SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are recorded as of the trade date. Dividend income and dis- 
tributions to stockholders are recorded as of the ex-dividend dates. Interest income, adjusted for amortization of discount and 
premium on investments, is earned from settlement date and is recognized on the accrual basis. Cost of short-term investments 
represents amortized cost. 
d. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Portfolio securities and other assets and liabilities denominated in foreign cur- 
rencies are translated into U.S. dollars based on the exchange rate of such currencies versus U.S. dollars on the date of valuation. 
Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars 
at the exchange rate in effect on the transaction date. Events may impact the availability or reliability of foreign exchange rates 
used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value 
using procedures established and approved by the Company’s Board of Directors. The Company does not separately report the 
effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net 
realized and unrealized gain or loss from investments on the Statement of Operations. 
   Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the 
trade and settlement dates on security transactions and the difference between the recorded amounts of dividends, interest, 
and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign 
exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than 
investments in securities held at the end of the reporting period. 
   Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of 
U.S. companies as a result of, among other factors, the possibility of political or economic instability or the level of governmental 
supervision and regulation of foreign securities markets. 
e. DIVIDENDS AND DISTRIBUTIONS The Company expects to pay dividends of net investment income and distributions of net realized 
capital and currency gains, if any, annually to common shareholders and quarterly to preferred shareholders. Dividends and 
distributions to common and preferred shareholders, which are determined in accordance with Federal income tax regulations 
are recorded on the ex-dividend date. Distributions for tax and book purposes are substantially the same. Permanent book/tax 
differences relating to income and gains are reclassifi ed to paid-in capital as they arise. 
f. FEDERAL INCOME TAXES The Company’s policy is to fulfi ll the requirements of the Internal Revenue Code applicable to regulated 
investment companies and to distribute substantially all taxable income to its stockholders. Accordingly, no provision for Federal 
income taxes is required. As of and during the period ended March 31, 2011, the Company did not have any liabilities for any unrec- 
ognized tax positions. The Company recognizes interest and penalties, if any, related to unrecognized tax positions as income tax 
expense in the Statement of Operations. During the period, the Company did not incur any interest or penalties. 
g. CONTINGENT LIABILITIES Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and 
an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associ- 
ated with the ultimate resolution of a matter that are reasonably estimable and, if so, they are included in the accrual. 
h. INDEMNIFICATIONS In the ordinary course of business, the Company enters into contracts that contain a variety of indemnifi ca- 
tions. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior 
claims or losses pursuant to these indemnifi cation provisions and expects the risk of loss thereunder to be remote. 

 




2. FAIR VALUE MEASUREMENTS - Various data inputs are used in determining the value of the Company’s investments. These inputs are 
summarized in a hierarchy consisting of the three broad levels listed below: 
     Level 1 - quoted prices in active markets for identical securities (including money market funds which are valued using amortized cost 
                    and which transact at net asset value, typically $1 per share), 
     Level 2 - other signifi cant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.), and 
     Level 3 - signifi cant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those 
securities. The following is a summary of the inputs used to value the Company’s net assets as of March 31, 2011: 

 

Assets  Level 1  Level 2  Level 3  Total 
Common stocks  $1,149,082,598  —  $17,500,000  $1,166,582,598 
Warrant  2,936,500  —  —  2,936,500 
Money market fund  17,624,536  —  —  17,624,536 
     Total  $1,169,643,634  —  $17,500,000  $1,187,143,634 
Liabilities         
Option Written  ($190,190)  —  —  ($190,190) 

 

The aggregate value of Level 3 portfolio investments changed during the three months ended March 31, 2011 as follows: 
  Change in portfolio valuations using signifi cant unobservable inputs  Level 3 
  Fair value at December 31, 2010  $17,550,000 
  Net change in unrealized appreciation on investments  (50,000) 
  Fair value at March 31, 2011  $17,500,000 
  The reduction in net unrealized appreciation included in the results of operations attributable to   
    Level 3 assets held at March 31, 2011 and reported within the caption Net change in   
    unrealized appreciation/depreciation in the Statement of Operations:  $50,000 

 

3. PURCHASES AND SALES OF SECURITIES - Purchases and sales of securities (other than short-term securities and options) for the 
months ended March 31, 2011 amounted to $52,741,320 and $53,139,236, on long transactions, respectively. 

 

4. WRITTEN OPTIONS - Transaction in collateralized put options during the three months ended March 31, 2011 was as follows:
  Contracts  Premiums 
Options outstanding, December 31, 2010  —  — 
Options written  209  $163,590 
Options outstanding, March 31, 2011  209  $163,590 

 

5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS - The authorized capital stock of the Company consists of 50,000,000 shares of 
Common Stock, $1.00 par value, and 10,000,000 shares of Preferred Stock, $1.00 par value. With respect to the Common Stock, 
30,408,219 shares were issued and outstanding; 8,000,000 Preferred Shares were originally issued and 7,604,687 were outstanding on 
March 31, 2011. 
On September 24, 2003, the Company issued and sold 8,000,000 shares of its 5.95% Cumulative Preferred Stock, Series B in an 
underwritten offering. The Preferred Shares were noncallable for the 5 year period ended September 24, 2008 and have a liquidation 
preference of $25.00 per share plus accumulated and unpaid dividends to the date of redemption. On December 10, 2008, the Board of 
Directors authorized the repurchase of 1 million Preferred Shares in the open market at prices below $25.00 per share. 
The Company is required to allocate distributions from long-term capital gains and other types of income proportionately among hold 
ers of shares of Common Stock and Preferred Stock. To the extent that dividends on the shares of Preferred Stock are not paid from 
long-term capital gains, they will be paid from ordinary income or net short-term capital gains or will represent a return of capital. 
Under the Investment Company Act of 1940, the Company is required to maintain an asset coverage of at least 200% of the Preferred 
Stock. In addition, pursuant to Moody’s Investor Service, Inc. Rating Agency Guidelines, the Company is required to maintain a certain 
discounted asset coverage for its portfolio that equals or exceeds a Basic Maintenance Amount. The Company has met these require 
ments since the issuance of the Preferred Stock. If the Company fails to meet these requirements in the future and does not cure such 
failure, the Company may be required to redeem, in whole or in part, shares of Preferred Stock at a redemption price of $25.00 per 
share plus accumulated and unpaid dividends. In addition, failure to meet the foregoing asset coverage requirements could restrict the 
Company’s ability to pay dividends on shares of Common Stock and could lead to sales of portfolio securities at inopportune times. 
The holders of Preferred Stock have voting rights equivalent to those of the holders of Common Stock (one vote per share) and, gener 
ally, vote together with the holders of Common Stock as a single class. 
Holders of Preferred Stock will elect two members of the Company’s Board of Directors and the holders of Preferred and Common 
Stock, voting as a single class, will elect the remaining directors. If the Company fails to pay dividends on the Preferred Stock in an 
amount equal to two full years’ dividends, the holders of Preferred Stock will have the right to elect a majority of the directors. In 
addition, the Investment Company Act of 1940 requires that approval of the holders of a majority of any outstanding Preferred Shares, 
voting separately as a class, would be required to (a) adopt any plan of reorganization that would adversely affect the Preferred Stock 
and (b) take any action requiring a vote of security holders, including, among other things, changes in the Company’s subclassifi cation 
as a closed-end investment company or changes in its fundamental investment policies. 

 




5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS - (Continued from bottom of previous page.) 
The Company presents its Preferred Stock, for which its redemption is outside of the Company’s control, outside of the net assets 
applicable to Common Stock in the Statement of Assets and Liabilities. 

 

Transactions in Common Stock during the three months ended March 31, 2011 and the year ended December 31, 2010 were as follows: 
  Shares  Amount 
  2011  2010  2011  2010 
Increase in par value of shares issued in payment of dividends and         
  distributions (includes 277,555 shares issued from treasury)  —  277,555  —  $277,555 
Increase in paid-in capital      —  6,941,665 
  Total increase      —  7,219,220 
Decrease in par value of shares purchased (average discount from         
  NAV of 13.5% and 14.6%, respectively)  15,075  1,279,476  ($15,075)  (1,279,476) 
Decrease in paid-in capital      (411,847)  (29,562,658) 
  Total decrease      (426,922)  (30,842,134) 
Net decrease      ($426,922)  ($23,622,914) 

 

At March 31, 2011, the Company held in its treasury 1,572,653 shares of Common Stock with an aggregate cost in the amount of 
$37,729,744. 
6. OFFICERS’ COMPENSATION - The aggregate compensation accrued and paid by the Company during the three months ended March 31, 
2011 to its offi cers (identifi ed on back cover) amounted to $1,711,875. 

 

7. BENEFIT PLANS - The Company has funded (qualified) and unfunded (supplemental) noncontributory defined benefit pension plans that
cover its employees. The plans provide defined benefits based on years of service and final average salary with an offset for a portion
of social security covered compensation. The components of the net periodic benefit cost (income) of the plans for the three months
ended March 31, 2011 were:   
Service cost  $118,711 
Interest cost  193,510 
Expected return on plan assets  (288,207) 
Amortization of prior service cost  11,502 
Recognized net actuarial loss  78,865 
Net periodic benefit cost  $114,381 

 

The Company recognizes the overfunded or underfunded status of a defi ned benefi t postretirement plan as an asset or liability in the 
Statement of Assets and Liabilities and recognizes changes in funded status in the year in which the changes occur through other com- 
prehensive income. 
The Company also has funded (qualifi ed) and unfunded (supplemental) defi ned contribution thrift plans that are available to its employ- 
ees. The aggregate cost of such plans for the three months ended March 31, 2011 was $493,735. The qualifi ed thrift plan acquired 2,400 
shares and sold 3,131 shares of the Company’s Common Stock during the three months ended March 31, 2011 and held 551,404 shares 
of the Company’s Common Stock at March 31, 2011. 
8. OPERATING LEASE COMMITMENT - In September 2007, the Company entered into an operating lease agreement for offi ce space which 
expires in February 2018 and provided for future rental payments in the aggregate amount of approximately $10,755,000, net of con- 
struction credits. The lease agreement contains clauses whereby the Company receives free rent for a specifi ed number of months and 
credit towards construction of offi ce improvements, and incurs escalations annually relating to operating costs and real property taxes 
and to annual rent charges beginning in February 2013. The Company has the option to renew the lease after February 2018 for five 
years at market rates. Rental expense approximated $272,500 for the three months ended March 31, 2011. Minimum rental commitments 
under the operating lease are approximately $1,075,000 per annum in 2012, $1,183,000 in 2013 through 2017, and $99,000 in 2018. 
9. LITIGATION - The Company is subject to a legal action arising from a construction worker’s personal injury that is covered under 
the terms of its insurance policies. Defense and legal costs are being funded by the insurer; damages of an amount that is immaterial 
to the Company are being negotiated at this time. No liabilities or expenses have been incurred by the Company to date. 

 


Purchases of the Company’s Common Stock as set forth in Note 5 on page 11, may be at such times, at such prices, in such amounts and in such 
manner as the Board of Directors may deem advisable. 
The policies and procedures used by the Company to determine how to vote proxies relating to portfolio securities and the Company’s proxy voting 
record for the twelve-month period ended June 30, 2010 are available: (1) without charge, upon request, by calling us at our toll-free telephone num- 
ber (1-800-436-8401), (2) on the Company’s website at www.generalamericaninvestors.com and (3) on the Securities and Exchange Commission’s 
website at www.sec.gov. 
In addition to distributing financial statements as of the end of each quarter, General American Investors files a Quarterly Schedule of Portfolio 
Holdings (Form N-Q) with the Securities and Exchange Commission (“SEC”) as of the end of the first and third calendar quarters. The Company’s 
Forms N-Q are available at www.generalamericaninvestors.com and on the SEC’s website: www.sec.gov. Also, Forms N-Q may be reviewed and 
copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the SEC’s Public Reference Room may be obtained 
by calling 1-800-SEC-0330. A copy of the Company’s Form N-Q may also be obtained by calling us at 1-800-436-8401. 
On April 30, 2010, the Company submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the Company’s prin- 
cipal executive officer certified that he was not aware, as of that date, of any violation by the Company of the NYSE’s Corporate Governance listing 
standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Company’s principal executive and 
principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, 
the Company’s disclosure controls and procedures and internal control over financial reporting, as applicable. 

 



DIRECTORS
Spencer Davidson, Chairman
Sidney R. Knafel, Lead Independent Director 
Arthur G. Altschul, Jr.  Betsy F. Gotbaum 
Rodney B. Berens  Daniel M. Neidich 
Lewis B. Cullman  D. Ellen Shuman 
Gerald M. Edelman  Raymond S. Troubh 
John D. Gordan, III   

 

OFFICERS 
          Spencer Davidson, President & Chief Executive Officer 
          Andrew V. Vindigni, Senior Vice-President 
          Sally A. Lynch, Vice-President 
          Michael W. Robinson, Vice-President 
          Eugene S. Stark, Vice-President, Administration & 
Chief Compliance Officer 
          Jesse R. Stuart, Vice-President 
          Diane G. Radosti, Treasurer 
          Carole Anne Clementi, Secretary 
          Craig A. Grassi, Assistant Vice-President 
          Maureen E. LoBello, Assistant Secretary 

 

SERVICE COMPANIES
COUNSEL  TRANSFER AGENT AND REGISTRAR 
Sullivan & Cromwell LLP  American Stock Transfer & Trust 
   Company, LLC 
INDEPENDENTAUDITORS   59 Maiden Lane   
Ernst & Young LLP  New York, NY 10038 
  1-800-413-5499 
CUSTODIAN  www.amstock.com 
State Street Bank and 
     Trust Company   

 

RESULTS OF THE ANNUAL MEETING
OF STOCKHOLDERS
The votes cast by stockholders at the Company’s annual meeting held 
on April 13, 2011 were as follows:   
  FOR  WITHHELD 
Election of Directors:     
Rodney B. Berens  31,264,947  1,128,153 
Lewis B. Cullman  30,293,956  2,099,144 
Spencer Davidson  30,779,197  1,613,903 
Gerald M. Edelman  30,407,409  1,985,691 
John D. Gordan, III  30,597,345  1,795,755 
Betsy F. Gotbaum  30,871,080  1,522,020 
Sidney R. Knafel  30,426,570  1,966,530 
Daniel M. Neidich  30,565,233  1,827,867 
D. Ellen Shuman  30,580,546  1,812,554 
Elected by holders of Preferred Stock only:   
Arthur G. Altschul, Jr.  6,840,644  128,138 
Raymond S. Troubh  6,815,479  153,303 
Ratification of the selection of Ernst & Young LLP as auditors of the 
Company for the year 2011:   
For - 31,450,421;  Against - 271,144;  Abstain - 671,535