mar2012.htm - Generated by SEC Publisher for SEC Filing

For the three months ended March 31, 2012, the  The equity market experienced its best first quarter 
net asset value per Common Share increased  in more than a decade, and General American par- 
13.7%, while the investment return to our  ticipated fully in the advance. Against the backdrop 
stockholders increased by 16.4%. By comparison,  of promised easy money for an extended period, 
our benchmark, the Standard & Poor’s 500 Stock  moderating concerns in the euro zone together with 
Index (including income), increased 12.6%. For the  our ongoing slow recovery appear to be supporting 
twelve months ended March 31, 2012, the return on  equity prices. 
the net asset value per Common Share increased by   
4.6%, and the return to our stockholders increased by  While corporate profit margins are likely to shrink 
4.4%; these compare with an increase of 8.5% for the  from current record levels as labor markets stabilize 
S&P 500. During both periods, the discount at which  and the costs of production rise, earnings on a per 
our shares traded continued to fluctuate and on March  share basis are likely to hold up, buoyed by volume 
31, 2012, it was 14.4%.  growth and share buy-backs. Though it remains to 
  be seen if the market can stand on its own two feet 
As detailed in the accompanying financial statements  without central bank support, valuations are not yet 
(unaudited), as of March 31, 2012, the net assets  expensive by most measures, with ample room for 
applicable to the Company’s Common Stock were  multiples to move higher, toward their long-term 
$987,992,055 equal to $33.86 per Common Share.  averages. 
The increase in net assets resulting from operations  Information about the Company, including our 
for the three months ended March 31, 2012 was  investment objectives, operating policies and 
$117,487,714.  During this period, the net realized  procedures, investment results, record of dividend 
gain on investments sold was $27,310,127, and  and distribution payments, financial reports and press 
the increase in net unrealized appreciation was  releases, is on our website and has been updated 
$93,207,262.  Net investment loss for the  through March 31, 2012. It can be accessed on the 
three months was $201,682, and distributions to  internet at www.generalamericaninvestors.com. 
Preferred Stockholders amounted to $2,827,993.   
  By Order of the Board of Directors, 
During the three months, 587,157 shares of the   
Company’s Common Stock were repurchased for  GENERAL AMERICAN INVESTORS COMPANY, INC. 
$16,033,029 at an average discount from net asset  Spencer Davidson 
value of 14.9% Chairman of the Board 
  and Chief Executive Officer 
  April 11, 2012 

 



      Value 
Shares  COMMON STOCKS    (note 1a) 
AEROSPACE/DEFENSE (2.7%)     
325,000  United Technologies Corporation  (Cost $22,957,205)  $26,955,500 
COMMUNICATIONS AND INFORMATION SERVICES (6.9%)     
960,000  Cisco Systems, Inc.    20,304,000 
700,000  QUALCOMM Incorporated    47,642,000 
    (Cost $38,582,394)  67,946,000 
COMPUTER SOFTWARE AND SYSTEMS (8.5%)     
50,000  Apple Inc. (a)    29,977,500 
825,000  Dell Inc. (a)    13,690,875 
770,000  Microsoft Corporation    24,836,350 
230,000  Teradata Corporation (a)    15,674,500 
    (Cost $55,091,257)  84,179,225 
CONSUMER PRODUCTS AND SERVICES (13.8%)     
350,000  Diageo plc ADR    33,775,000 
450,000  Nestle S.A.    28,043,312 
325,000  PepsiCo, Inc.    21,563,750 
206,000  Towers Watson & Co. Class A    13,610,420 
722,894  Unilever N.V.    24,739,377 
275,713  Visteon Corporation (a)    14,612,789 
    (Cost $98,895,863)  136,344,648 
DIVERSIFIED (1.4%)       
110  Berkshire Hathaway Inc. Class A (a)  (Cost $1,250,573)  $13,409,000 
ENVIRONMENTAL CONTROL (INCLUDING SERVICES) (5.2%)     
957,100  Republic Services, Inc.    29,248,976 
630,000  Waste Management, Inc.    22,024,800 
    (Cost $39,190,474)  51,273,776 
FINANCE AND INSURANCE (25.1%)     
BANKING (4.3%)       
500,000  Bond Street Holdings LLC (a) (b)    9,000,000 
520,000  JPMorgan Chase & Co.    23,909,600 
110,000  M&T Bank Corporation    9,556,800 
    (Cost $31,140,007)  42,466,400 
INSURANCE (11.6%)       
875,000  Arch Capital Group Ltd. (a)    32,585,000 
245,000  Everest Re Group, Ltd.    22,667,400 
53,500  Forethought Financial Group, Inc. Class A (a) (c)    12,037,500 
325,000  MetLife, Inc.    12,138,750 
285,000  PartnerRe Ltd.    19,348,650 
435,000  Platinum Underwriters Holdings, Ltd.    15,877,500 
    (Cost $60,650,358)  114,654,800 
OTHER (9.2%)       
315,000  American Express Company    18,225,900 
330,492  Aon Corporation    16,213,937 
1,666,667  Epoch Holding Corporation    39,800,008 
645,000  Nelnet, Inc.    16,711,950 
    (Cost $36,368,971)  90,951,795 
    (Cost $128,159,336)  248,072,995 

 




      Value 
Shares  COMMON STOCKS (continued)    (note 1a) 
HEALTH CARE / PHARMACEUTICALS (4.2%)     
150,000  Celgene Corporation (a)    $11,628,000 
529,900  Cytokinetics, Incorporated (a)    609,385 
214,300  Gilead Sciences, Inc. (a)    10,470,698 
413,800  Intercell AG (a)    1,527,232 
755,808  Pfizer Inc.    17,115,272 
4,883  Poniard Pharmaceuticals, Inc. (a)    4,834 
    (Cost $43,265,395)  41,355,421 
MACHINERY AND EQUIPMENT (3.7%)     
1,200,000  ABB Ltd. ADR    24,492,000 
900,000  The Manitowoc Company, Inc.    12,474,000 
    (Cost $23,703,922)  36,966,000 
METALS AND MINING (2.2%)     
467,700  Alpha Natural Resources, Inc. (a)    7,113,717 
200,000  Freeport-McMoRan Copper & Gold Inc.    7,608,000 
150,000  Nucor Corporation    6,442,500 
    (Cost $37,134,911)  21,164,217 
MISCELLANEOUS (4.2%)     
  Other (d)  (Cost $41,006,808)  41,407,382 
OIL AND NATURAL GAS (INCLUDING SERVICES) (10.6%)     
296,478  Apache Corporation    29,778,250 
300,000  Canadian Natural Resources Limited    9,954,000 
130,062  Devon Energy Corporation    9,250,010 
750,000  Halliburton Company    24,892,500 
2,050,000  Weatherford International Ltd. (a)    30,934,500 
    (Cost $74,984,196)  104,809,260 
RETAIL TRADE (16.1%)     
394,500  Costco Wholesale Corporation    35,820,600 
460,000  Target Corporation    26,804,200 
2,140,708  The TJX Companies, Inc.    85,007,515 
191,050  Wal-Mart Stores, Inc.    11,692,260 
    (Cost $49,050,347)  159,324,575 
SEMICONDUCTORS (2.9%)     
575,000  ASML Holding N.V.  (Cost $13,463,950)  28,830,500 
TECHNOLOGY (1.3%)       
750,000  International Game Technology  (Cost $8,678,620)  12,592,500 
TOTAL COMMON STOCKS (108.8%)  (Cost $675,415,251)  1,074,630,999 
Warrants  WARRANT     
BANKING (0.3%)       
225,000  JPMorgan Chase & Co., expires 10/28/2018 (a)  (Cost $2,865,853)  3,010,500 

 




      Value 
Shares SHORT-TERM SECURITY AND OTHER ASSETS    (note 1a) 
107,427,994  SSgA U.S. Treasury Money Market Fund (10.9%)          (Cost $107,427,994)  $107,427,994 
TOTAL INVESTMENTS (e) (120.0%)          (Cost $785,709,098)  1,185,069,493 
Liabilities in excess of cash, receivables and other assets (-0.7%)    (6,960,263) 
PREFERRED STOCK (-19.3%)    (190,117,175) 
NET ASSETS APPLICABLE TO COMMON STOCK (100%)    $987,992,055 

 

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 is $20.00 per share and fair value is $18.00 per share, note 2. Fair value is based upon bid and/or transaction prices provided via the NASDAQ OMX 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 $10,748,000, unit cost is $200.90 per share and fair value is $225.00 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 as well as actual transaction prices resulting from limited trading in the security.

(d) Securities which have been held for less than one year, not previously disclosed, and not restricted.

(e) At March 31, 2012: the cost of investments for Federal income tax purposes was the same as the cost for financial reporting purposes, aggregate gross unrealized appreciation was $441,252,422, aggregate gross unrealized depreciation was $41,892,027, and net unrealized appreciation was $399,360,395.

(see notes to financial statements)


  SHARES  SHARES 
DECREASES  TRANSACTED  HELD 
ELIMINATIONS     
The Travelers Companies, Inc.  150,000  — 
Xerox Corporation  1,650,000  — 
REDUCTIONS     
Apple Inc.  10,000  50,000 
Celgene Corporation  20,000  150,000 
Gilead Sciences, Inc.  350,200  214,300 
The TJX Companies, Inc.  871,692  2,140,708 
Wal-Mart Stores, Inc.  121,950  191,050 
(a) Common shares unless otherwise noted; excludes transactions in Common Stocks - Miscellaneous - Other.

 


The diversification of the Company’s net assets applicable to its Common Stock by industry group as of March 31, 2012 is shown in the following 
table.       
PERCENT COMMON
INDUSTRY CATEGORY  COST(000)  VALUE(000)  NET ASSETS* 
Finance and Insurance       
Banking  $34,006  $45,477  4.6% 
Insurance  60,650  114,655  11.6 
Other  36,369  90,952  9.2 
  131,025  251,084  25.4 
Retail Trade  49,050  159,325  16.1 
Consumer Products and Services  98,896  136,345  13.8 
Oil and Natural Gas (Including Services)  74,984  104,809  10.6 
Computer Software and Systems  55,091  84,179  8.5 
Communications and Information Services  38,582  67,946  6.9 
Environmental Control (Including Services)  39,191  51,274  5.2 
Health Care/Pharmaceuticals  43,265  41,355  4.2 
Machinery and Equipment  23,704  36,966  3.7 
Miscellaneous**  41,007  41,407  4.2 
Semiconductors  13,464  28,830  2.9 
Aerospace/Defense  22,957  26,956  2.7 
Metals and Mining  37,135  21,164  2.2 
Diversified  1,251  13,409  1.4 
Technology  8,679  12,592  1.3 
  678,281  1,077,641  109.1 
Short-Term Securities  107,428  107,428  10.9 
Total Investments  $785,709  1,185,069  120.0 
Other Assets and Liabilities - Net    (6,960)  (0.7) 
Preferred Stock    (190,117)  (19.3) 
Net Assets Applicable to Common Stock    $987,992  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 $675,415,251)    $1,074,630,999 
Warrant (cost $2,865,853)    3,010,500 
Money market fund (cost $107,427,994)    107,427,994 
Total investments (cost $785,709,098)    1,185,069,493 
RECEIVABLES AND OTHER ASSETS     
Dividends, interest and other receivables  $1,005,370   
Qualified pension plan asset, net excess funded (note 7)  961,952   
Prepaid expenses and other assets  2,068,141  4,035,463 
TOTAL ASSETS    1,189,104,956 
LIABILITIES       
Payable for securities purchased  1,130,399   
Accrued preferred stock dividend not yet declared  219,955   
Accrued supplemental pension plan liability (note 7)  4,205,142   
Accrued supplemental thrift plan liability (note 7)  3,657,162   
Accrued expenses and other liabilities  1,783,068   
TOTAL LIABILITIES    10,995,726 
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 - 29,179,232 shares (note 5)    $987,992,055 
NET ASSET VALUE PER COMMON SHARE    $33.86 
NET ASSETS APPLICABLE TO COMMON STOCK       
Common Stock, 29,179,232 shares at par value (note 5)  $29,179,232   
Additional paid-in capital (note 5)  540,937,916   
Undistributed net investment income (note 5)  1,084,362   
Undistributed realized gain on investments  28,163,292   
Accumulated other comprehensive income (note 7)  (7,685,194)   
Unallocated distributions on Preferred Stock  (3,047,948)   
Unrealized appreciation on investments  399,360,395   
NET ASSETS APPLICABLE TO COMMON STOCK    $987,992,055 
(see notes to financial statements)     

 




INCOME       
Dividends (net of foreign withholding taxes of $31,973)  $3,666,934   
Interest  2,242  $3,669,176 
EXPENSES       
Investment research  2,331,096   
Administration and operations  870,802   
Office space and general  413,449   
Directors’ fees and expenses  69,866   
Transfer agent, custodian and registrar fees and expenses  54,297   
Auditing and legal fees  48,000   
Miscellaneous taxes  44,219   
Stockholders’ meeting and reports  39,129  3,870,858 
NET INVESTMENT LOSS    (201,682) 
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 $950)  27,634,930   
                Written option transactions (notes 1b and 4)  (324,803)   
  27,310,127   
Net increase in unrealized appreciation on investments  93,207,262   
NET GAIN ON INVESTMENTS    120,517,389 
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS    (2,827,993) 
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS    $117,487,714 

 


  Three Months Ended   
  March 31, 2012  Year Ended 
OPERATIONS  (Unaudited)    December 31, 2011 
Net investment income (loss)  ($201,682)  $5,295,369 
Net realized gain on investments  27,310,127  19,507,647 
Net increase (decrease) in unrealized appreciation  93,207,262  (42,899,858) 
  120,315,707  (18,096,842) 
Distributions to Preferred Stockholders:     
From net investment income  —  (3,326,632) 
From short-term capital gains  —  (249,312) 
From long-term capital gains  —  (7,736,028) 
Unallocated distributions  (2,827,993)  — 
Decrease in net assets from Preferred distributions  (2,827,993)  (11,311,972) 
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS  117,487,714  (29,408,814) 
OTHER COMPREHENSIVE INCOME - Funded status of defined benefit plans (note 7)  —  (2,864,213) 
DISTRIBUTIONS TO COMMON STOCKHOLDERS       
From net investment income  —  (4,388,308) 
From short-term capital gains  —  (328,878) 
From long-term capital gains  —  (10,204,952) 
DECREASE IN NET ASSETS FROM COMMON DISTRIBUTIONS  —  (14,922,138) 
CAPITAL SHARE TRANSACTIONS (NOTE 5)       
Value of Common Shares issued in payment of dividends and distributions  —  7,094,056 
Cost of Common Shares purchased  (16,033,029)  (24,302,457) 
DECREASE IN NET ASSETS - CAPITAL TRANSACTIONS  (16,033,029)  (17,208,401) 
NET INCREASE (DECREASE) IN NET ASSETS  101,454,685  (64,403,566) 
NET ASSETS APPLICABLE TO COMMON STOCK       
BEGINNING OF PERIOD  886,537,370  950,940,936 
END OF PERIOD (including undistributed net investment income of $1,084,362 and     
$1,286,147, respectively)  $987,992,055  $886,537,370 
(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, 2012 and for each year in the five-year period ended December 31, 2011. 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, 2012  Year Ended December 31,
  (Unaudited)  2011  2010  2009  2008  2007 
PER SHARE OPERATING PERFORMANCE             
Net asset value, beginning of period  $29.78  $31.26  $27.50  $21.09  $38.10  $40.54 
Net investment income (loss)  (.01)  .18  .19  .11  .42  .31 
Net gain (loss) on securities -             
realized and unrealized  4.19  (.68)  4.37  6.94  (16.15)  3.39 
Other comprehensive income  —  (.10)  —  .07  (.25)  .02 
  4.18  (.60)  4.56  7.12  (15.98)  3.72 
Distributions on Preferred Stock:             
Dividends from net investment income  —  (.11)  (.07)  (.11)  (.11)  (.02) 
Distributions from net short-term capital gains  —  (.01)  (.03)  (.05)  —  (.03) 
Distributions from net long-term capital gains  —  (.26)  (.27)  (.19)  (.27)  (.36) 
Distributions from return of capital  —  —  —  (.01)  —  — 
Unallocated  (.10)  —  —  —  —  — 
  (.10)  (.38)  (.37)  (.36)  (.38)  (.41) 
Total from investment operations  4.08  (.98)  4.19  6.76  (16.36)  3.31 
Distributions on Common Stock:             
Dividends from net investment income  —  (.15)  (.08)  (.10)  (.19)  (.33) 
Distributions from net short-term capital gains  —  (.01)  (.03)  (.05)  —  (.38) 
Distributions from net long-term capital gains  —  (.34)  (.32)  (.19)  (.46)  (5.04) 
Distributions from return of capital  —  —  —  (.01)  —  — 
  —  (.50)  (.43)  (.35)  (.65)  (5.75) 
Net asset value, end of period  $33.86  $29.78  $31.26  $27.50  $21.09  $38.10 
Per share market value, end of period  $29.00  $24.91  $26.82  $23.46  $17.40  $34.70 
TOTAL INVESTMENT RETURN - Stockholder             
return, based on market price per share  16.42%*  (5.29%)  16.24%  36.86%  (48.20%)  8.72% 
RATIOS AND SUPPLEMENTAL DATA             
Net assets applicable to Common Stock,             
end of period (000’s omitted)  $987,992 $886,537 $950,941 $864,323 $674,598 $1,202,923
Ratio of expenses to average net assets             
applicable to Common Stock  1.65%**  1.39%  1.54%  1.93%  0.87%  1.11% 
Ratio of net income to average net assets             
applicable to Common Stock  (0.08%)**  0.56%  0.66%  0.46%  1.31%  0.78% 
Portfolio turnover rate  0.93%*  11.17%  18.09%  24.95%  25.52%  31.91% 
PREFERRED STOCK             
Liquidation value, end of period (000’s omitted)  $190,117 $190,117  $190,117  $190,117  $199,617  $200,000 
Asset coverage  620%  566%  600%  555%  438%  701% 
Liquidation preference per share  $25.00  $25.00  $25.00  $25.00  $25.00  $25.00 
Market value per share  $25.61  $25.47  $24.95  $24.53  $21.90  $21.99 
*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 man- 
agement 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 portfolio. 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 specifi c procedures appropriate to each security as 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 
distributions to stockholders are recorded as of the ex-dividend dates. Interest income, adjusted for amortization of discount and pre- 
mium on investments, is earned from settlement date and is recognized on the accrual basis. Cost of short-term investments represent 
amortized cost. 
 
d. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Portfolio securities and other assets and liabilities denominated in foreign 
currencies 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 supervi- 
sion 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. In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, man- 
agement has analyzed the Company’s tax positions taken or expected to be taken on Federal and State income tax returns for all open 
tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Company’s 
financial statements. 
 
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 associated 
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 $1.00 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, 2012: 

 

Assets  Level 1  Level 2  Level 3  Total 
Common stocks  $1,053,593,499  —  $21,037,500  $1,074,630,999 
Warrant  3,010,500  —  —  3,010,500 
Money market fund  107,427,994  —  —  107,427,994 
   Total  $1,164,031,993  —  $21,037,500  $1,185,069,493 

 

The aggregate value of Level 3 portfolio investments changed during the three months ended March 31, 2012 as follows: 
Change in portfolio valuations using signifi cant unobservable inputs  Level 3 
Fair value at December 31, 2011  $19,860,500 
Net change in unrealized appreciation on investments  1,177,000 
Fair value at March 31, 2012  $21,037,500 
The increase in net unrealized appreciation included in the results of operations attributable to  
Level 3 assets held at March 31, 2012 and reported within the caption Net change in   
unrealized appreciation/depreciation in the Statement of Operations:  $1,177,000 
 
3. PURCHASES AND SALES OF SECURITIES - Purchases and sales of securities (other than short-term securities and options) for the three 
months ended March 31, 2012 amounted to $9,895,878 and $84,544,235, on long transactions, respectively. 
 
4. WRITTEN OPTIONS - Transactions in written call options during the three months ended March 31, 2012 were as follows: 

 

  Contracts  Premiums 
Options outstanding, December 31, 2011     0  $0 
Options written  300  311,107 
Options exercised  (100)  (101,421) 
Options terminated in closing purchase transaction  (200)  (209,686) 
Options outstanding, March 31, 2012     0  $0 

 

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, 
29,179,232 shares were issued and outstanding; 8,000,000 Preferred Shares were originally issued and 7,604,687 were outstanding on 
March 31, 2012. 
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 up to 1 million Preferred Shares in the open market at prices below $25.00 per share. To date, 
395,313 shares have been repurchased. 
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 to 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, 2012 and the year ended December 31, 2011 were as follows: 

 

    Shares      Amount   
  2012    2011  2012  2011 
Shares issued in payment of dividends and distributions           
(includes 278,416 shares issued from treasury)  —    278,416  —  $278,416 
Increase in paid-in capital        —  6,815,640 
Total increase        —  7,094,056 
 
Shares purchased (at an average discount from net asset value           
of 14.9% and 14.6%, respectively)  587,157    935,321  ($587,157)  (935,321) 
Decrease in paid-in capital        (15,445,872)  (23,367,136) 
Total decrease        (16,033,029)  (24,302,457) 
Net decrease        ($16,033,029)  ($17,208,401) 

 

At March 31, 2012, the Company held in its treasury 2,801,640 shares of Common Stock with an aggregate cost in the amount of 
$71,170,164. 
 
6. OFFICERS’ COMPENSATION - The aggregate compensation accrued and paid by the Company during the three months ended March 31, 
2012 to its offi cers (identifi ed on back cover) amounted to $1,700,583. 
 
7. BENEFIT PLANS - The Company has funded (qualifi ed) and unfunded (supplemental) noncontributory defi ned benefi t pension plans 
that are available to its employees. The plans provide defi ned benefi ts 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, 2012 were: 

 

Service cost  $124,332 
Interest cost  188,571 
Expected return on plan assets  (270,924) 
Amortization of prior service cost  11,648 
Recognized net actuarial loss  149,524 
Net periodic benefi t cost  $203,151 

 

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, 2012 was $528,574. The qualifi ed thrift plan acquired 7,700 
shares of the Company’s Common Stock during the three months ended March 31, 2012 and held 587,544 shares of the Company’s 
Common Stock at March 31, 2012. 
 
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 $274,000 for the three months ended March 31, 2012. Minimum rental commitments 
under the operating lease are approximately $1,183,000 in 2013 through 2017, and $99,000 in 2018. 

 


Previous purchases of the Company’s Common and Preferred Stock are set forth in Note 5 on pages 10 and 11. Prospective purchases of Common 
and Preferred Stock 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, 2011 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, 2011, 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, Chief Executive Officer 
Jeffrey W. Priest, President 
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 11, 2012 were as follows:   
  FOR  WITHHELD 
Election of Directors:     
Rodney B. Berens  31,552,305  1,239,708 
Lewis B. Cullman  30,109,410  2,682,603 
Spencer Davidson  30,844,391  1,947,622 
Gerald M. Edelman  30,472,777  2,319,236 
John D. Gordan, III  30,849,867  1,942,146 
Betsy F. Gotbaum  30,777,865  2,014,148 
Sidney R. Knafel  30,559,680  2,232,333 
Daniel M. Neidich  27,893,818  4,898,195 
D. Ellen Shuman  31,230,820  1,561,193 
 
Elected by holders of Preferred Stock only:   
Arthur G. Altschul, Jr.  6,899,673  181,001 
Raymond S. Troubh  6,876,489  204,185 
 
Ratification of the selection of Ernst & Young LLP as auditors of the 
Company for the year 2012:   
For - 32,370,163;  Against - 216,182;  Abstain - 205,668