jun2014.htm - Generated by SEC Publisher for SEC Filing

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number: 811-00041

 

GENERAL AMERICAN INVESTORS COMPANY, INC.

 (Exact name of registrant as specified in charter)

 

100 Park Avenue, 35th Floor, New York, New York 10017

 (Address of principal executive offices) (Zip code)

 

Eugene S. Stark

General American Investors Company, Inc.

100 Park Avenue

35th Floor

New York, New York  10017

(Name and address of agent for service)

 

Copy to:

John E. Baumgardner, Jr., Esq.

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

 

 

Registrant's telephone number, including area code: 212-916-8400

 

Date of fiscal year end:  December 31

 

Date of reporting period: June 30, 2014

 

 

Item 1.  Report to Shareholders

For the six months ended June 30, 2014, the net asset value The economic expansion in the US has improved over the past
per Common Share increased 5.8% while the investment year notwithstanding the poor first quarter GDP result of -2.9%.
return to our stockholders increased by 4.6%. By comparison, Unemployment is 6.1% compared to 7.5% a year ago. Auto sales over
our benchmark, the Standard & Poor’s 500 Stock Index (including the trailing twelve months through June hit a recovery high of nearly
income), increased 7.1%. For the twelve months ended June 30, 2014, 17 million units. Consumers are enjoying modestly higher wages and
the return on the net asset value per Common Share increased by companies are spending more freely. Although households have not
24.7%, and the return to our stockholders increased by 22.3%; these fully enjoyed the bounce in economic activity, recent data suggest dual
compare with an increase of 24.6% for the S&P 500. During both income households are on the rise as are household formations, a cru-
periods, the discount at which our shares traded continued to fluctuate cial element to growth in housing and general consumption. It is hoped
and on June 30, 2014, it was 15.3%. that some of the headwinds including fuel and medical costs together
  with geo-political concerns will dissipate over time.
As detailed in the accompanying financial statements (unaudited), as  
of June 30, 2014, the net assets applicable to the Company’s Common Equity earnings multiples continue to be quite elevated for small capi-
Stock were $1,282,274,345 equal to $43.45 per Common Share. talized equities and some select sectors. For large capitalized equities
  they remain moderately attractive and in the absence of more tangible
The increase in net assets resulting from operations for the six months evidence of accelerating inflation, it would appear that interest rates are
ended June 30, 2014 was $67,645,490. During this period, the net likely to remain at historically low levels. We remain sanguine over
realized gain on investments sold was $70,744,327 and the decrease in the medium and long term for equities as they still represent a better
net unrealized appreciation was $2,189,756. Net investment income alternative to fixed income securities.
for the six months was $4,746,905 and distributions to Preferred  
Stockholders amounted to $5,655,986. We are saddened to report that Dr. Gerald M. Edelman, our esteemed
  colleague and director of the Company for thirty-eight years, died on
During the six months, 426,303 shares of the Company’s Common May 17, 2014. Dr. Edelman shared the 1972 Nobel Prize in Physiology
Stock were repurchased for $14,840,891 at an average discount from or Medicine for his work in deciphering the chemical structure of anti-
net asset value of 14.6%. bodies. In addition to his service on the Board and its Pension and
  Nominating Committees, Dr. Edelman also served as a Member and
Our annual report and first quarter letter highlighted the divergence in Professor of The Scripps Research Institute; Founder, Director and
the rate of improvement in the real and the financial economies that has President of the Neurosciences Institute of the Neurosciences Research
developed over the past several years. With particular emphasis on the Foundation; Chairman of the Advisory Board of NGN Capital; and
last two calendar years, we observed much of the US equity market’s Chairman of the Scientific Advisory Board of Promosome, LLC. His
gain is the result of price to earnings multiple expansion on modest counsel and support will be missed.
earnings growth, reflecting the moderate economic recovery. It would  
seem likely that the multiple expansion observed during this period Information about the Company, including our investment objectives,
relates to persistently high operating margins and Federal Reserve operating policies and procedures, investment results, record of divi-
induced low interest rates. Despite the Fed’s tapering of Quantitative dend and distribution payments, financial reports and press releases, is
Easing through reduced bond purchases, short term interest rates hover on our website and has been updated through June 30, 2014. It can be
near zero and long term US Treasury rates remain stable and near his- accessed on the internet at www.generalamericaninvestors.com.
toric lows. Given that the real and financial economies are linked over  
time, the relationship is mean reverting. Convergence can occur via By Order of the Board of Directors,
significantly improved economic performance and/or modest multiple GENERAL AMERICAN INVESTORS COMPANY, INC.
contraction. The low volatility present in the US equity markets sug-  
 gests that investors believe in a favorable resolution. Jeffrey W. Priest
 
  President and Chief Executive Officer
 
  July 23, 2014

 

 


              Value
    Shares   COMMON STOCKS     (note 1a)
CONSUMER   AUTOMOBILES AND COMPONENTS (1.9%)      
DISCRETIONARY   1,264,063   Ford Motor Company   $21,792,446
(12.4%) 30,000   Visteon Corporation (a)     2,910,300
          (Cost $17,055,623)   24,702,746
    CONSUMER SERVICES (2.0%)       
    284,170   Bob Evans Farms, Inc.     14,222,709
    750,000   International Game Technology     11,932,500
          (COST $22,158,101)   26,155,209
    RETAILING (8.5%)           
    284,050   Kohl’s Corporation     14,963,754
    460,000   Target Corporation     26,657,000
    1,244,668   The TJX Companies, Inc.     66,154,104
          (Cost $42,752,571)   107,774,858
          (Cost $81,966,295)   158,632,813
 
CONSUMER   FOOD, BEVERAGE AND TOBACCO (10.1%)      
STAPLES   196,039   Danone (a)     14,561,044
(13.6%) 237,400   Diageo plc ADR     30,213,898
    450,000   Nestle S.A.     34,869,163
    195,000   PepsiCo, Inc.     17,421,300
    734,620   Unilever N.V.     32,146,369
          (Cost $70,472,922)   129,211,774
    FOOD AND STAPLES RETAILING (3.5%)      
    394,500   Costco Wholesale Corporation (Cost $12,041,935)   45,430,620
          (Cost $82,514,857)   174,642,394
  
ENERGY   2,133,269   Alpha Natural Resources, Inc. (a)     7,914,428
(14.9%) 180,000   Anadarko Petroleum Corporation     19,704,600
    331,478   Apache Corporation     33,353,317
    1,050,615   Cameco Corporation     20,602,560
    248,100   Ensco plc - Class A     13,786,917
    620,000   Halliburton Company     44,026,200
    145,000   Occidental Petroleum Corporation     14,881,350
    803,803   Ultra Petroleum Corp. (a)     23,864,911
    550,000   Weatherford International plc (a)     12,650,000
          (Cost $121,056,382)   190,784,283
 
FINANCIALS   BANKS (2.4%)      
(22.3%) 795,000   FCB Financial Holdings, Inc., Class A (a) (b)     13,515,000
    75,000   FCB Financial Holdings, Inc., Class B (a) (c)     1,211,250
    125,000   M&T Bank Corporation     15,506,250
          (Cost $17,662,263)   30,232,500
    DIVERSIFIED FINANCIALS (5.4%)      
    255,000   American Express Company     24,191,850
    400,000   JPMorgan Chase & Co.     23,048,000
    525,000   Nelnet, Inc.     21,750,750
          (Cost $29,013,176)   68,990,600
    INSURANCE (14.5%)      
    293,492   Aon plc     26,440,694
    750,000   Arch Capital Group Ltd. (a)     43,080,000
    110   Berkshire Hathaway Inc. Class A (a)     20,889,055
    165,000   Everest Re Group, Ltd.     26,480,850
    365,000   MetLife, Inc.     20,279,400
    255,000   PartnerRe Ltd.     27,848,550
    335,000   Platinum Underwriters Holdings, Ltd.     21,724,750
          (Cost $57,247,899)   186,743,299
          (Cost $103,923,338)   285,966,399

 


 


            Value
    Shares   COMMON STOCKS (continued)     (note 1a)
HEALTH CARE   PHARMACEUTICALS, BIOTECHNOLOGY AND LIFE SCIENCES      
(8.5%) 1,200,000 Ariad Pharmaceuticals, Inc. (a)   $7,644,000
    200,000 Celgene Corporation (a)     17,176,000
    428,600 Gilead Sciences, Inc. (a)     35,535,226
    61,369 Idenix Pharmaceuticals, Inc. (a)     1,478,993
    427,191 Merck & Co., Inc.     24,712,999
    755,808 Pfizer Inc.     22,432,381
        (Cost $54,058,331)   108,979,599
 
INDUSTRIALS   CAPITAL GOODS (5.6%)      
(11.7%) 865,000 General Electric Company     22,732,200
    360,000 Owens Corning     13,924,800
    300,000 United Technologies Corporation     34,635,000
        (Cost $52,172,995)   71,292,000
    COMMERCIAL AND PROFESSIONAL SERVICES (5.2%)      
    1,087,100 Republic Services, Inc.     41,277,187
    245,798 Towers Watson & Co. Class A     25,619,526
        (Cost $31,349,168)   66,896,713
    TRANSPORTATION (0.9%)      
    422,500 Hertz Global Holdings, Inc. (a) (Cost $10,094,478)   11,842,675
        (Cost $93,616,641)   150,031,388
 
INFORMATION   SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT (3.9%)      
TECHNOLOGY   256,850 ASML Holding N.V.     23,956,400
(16.3%) 833,700 Intel Corporation     25,761,330
        (Cost $24,319,428)   49,717,730
    SOFTWARE AND SERVICES (2.8%)      
    154,500 eBay Inc. (a)     7,734,270
    680,686 Microsoft Corporation     28,384,606
        (Cost $25,305,863)   36,118,876
    TECHNOLOGY HARDWARE AND EQUIPMENT (9.6%)      
    469,000 Apple Inc.     43,584,170
    820,000 Cisco Systems, Inc.     20,377,000
    615,000 EMC Corporation     16,199,100
    536,200 QUALCOMM Incorporated     42,467,040
        (Cost $67,575,284)   122,627,310
        (Cost $117,200,575)   208,463,916
 
MATERIALS            
(1.3%) 336,300 The Dow Chemical Company (Cost $10,566,260)   17,305,998
  
 
MISCELLANEOUS     Other (d) (Cost $37,011,931)   37,016,544
(2.9%)          
 
      TOTAL COMMON STOCKS (103.9%) (Cost $701,914,610)   1,331,823,334
    Contracts        
    (100 shares each)   PUT OPTION/EXPIRATION DATE/EXERCISE PRICE    
Energy (0.0%)   1,500 Weatherford International plc/January 17, 2015/$20.00 (Cost $233,010)   138,000

 


 


        Value
 Shares  SHORT-TERM SECURITY AND OTHER ASSETS     (note 1a)
143,711,541 SSgA U.S. Treasury Money Market Fund (11.2%) (Cost $143,711,541) $143,711,541
TOTAL INVESTMENTS (e) (115.1%) (Cost $845,859,161)   1,475,672,875
Liabilities in excess of receivables and other assets (-0.3%)     (3,281,355)
PREFERRED STOCK (-14.8%)     (190,117,175)
 
NET ASSETS APPLICABLE TO COMMON STOCK (100%)   $1,282,274,345

 

ADR - American Depository Receipt (a) Non-income producing security.

(b) Level 3 fair value measurement, restricted security acquired in five installments as follows: 425,000 shares on 11/4/09, unit cost $20.00 per share; 150,000 shares on 4/2/13, unit cost $14.80 per share; 100,000 shares on 4/11/13, unit cost $14.05 per share; 100,000 shares on 10/4/13, unit cost $15.05 per share; and 20,000 shares on 10/14/13, unit cost $15.00 per share. Fair value is $17.00 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. Amount represents 1.05% of net assets.

(c) Level 3 fair value measurement, restricted security exchanged from Class A shares on 5/21/12, aggregate cost $1,500,000, unit cost is $20.00 per share and fair value is $16.15 per share, note 2. Fair value is based upon a judgmentally discounted bid price 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. Amount represents 0.09% of net assets.

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

(e) At June 30, 2014 the cost of investments for Federal income tax purposes was the same as the cost for financial reporting purposes, aggregate gross unrealized appreciation was $640,746,612, aggregate gross unrealized depreciation was $10,932,899, and net unrealized appreciation was $629,813,713.

S T A T E M E N T   O F   O P T I O N   W R I T T E N   J u n e  3 0 ,  2 0 1 4   ( U n a u d i t e d )
  Contracts   Value
  (100 shares each)   CALL OPTION/EXPIRATION DATE/EXERCISE PRICE (note 1a)
Energy (0.0%) 1,500   Weatherford International plc/January 17, 2015/$25.00  
    (Premium Received $120,987) $210,000
 
(see notes to unaudited financial statements)  

 


 


  SHARES SHARES  
INCREASES TRANSACTED HELD  
NEW POSITIONS      
Bob Evans Farms, Inc. 15,000 284,170 (b)
eBay Inc. — 154,500 (b)
Ensco plc -Class A 248,100 248,100 (b)
Hertz Global Holdings, Inc. — 422,500 (b)
ADDITIONS      
Cameco Corporation 249,577 1,050,615  
Danone 6,039 196,039  
 
DECREASES      
ELIMINATION      
The ADT Corporation 117,500 —  
REDUCTIONS      
Anadarko Petroleum Corporation 15,000 180,000  
Aon Corporation 37,000 293,492  
Halliburton Company 65,000 620,000  
Idenix Pharmaceuticals, Inc. 797,610 61,369  
PepsiCo, Inc. 25,000 195,000  
QUALCOMM Incorporated 90,000 536,200  
Visteon Corporation 98,141 30,000  
Weatherford International plc 250,000 550,000  

 

(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 June 30, 2014 is shown in the following table.
INDUSTRY CATEGORY

 

 

 COST(000) VALUE(000) PERCENT COMMON NET ASSETS*  
Financials                
Banks $17,662   $30,232   2.4%
Diversified Financials   29,013     68,991   5.4     
Insurance   57,248     186,743   14.5     
    103,923     285,966   22.3     
Information Technology                
Semiconductors & Semiconductor Equipment   24,320     49,718   3.9     
Software & Services   25,306     36,119   2.8     
Technology Hardware & Equipment   67,575     122,627   9.6     
    117,201     208,464   16.3     
Energy   121,289     190,922   14.9     
Consumer Staples                
Food, Beverage & Tobacco   70,473     129,212   10.1     
Food & Staples Retailing   12,042     45,431   3.5     
 
Consumer Discretionary   82,515     174,643   13.6     
Automobiles & Components   17,056     24,703   1.9     
Consumer Services   22,158     26,155   2.0     
Retailing   42,753     107,775   8.5     
    81,967     158,633   12.4     
Industrials                
Capital Goods   52,173     71,292   5.6     
Commercial & Professional Services   31,349     66,897   5.2     
Transportation   10,095     11,843   0.9     
 
Health Care   93,617     150,032   11.7     
Pharmaceuticals, Biotechnology & Life Sciences   54,058     108,979   8.5     
Miscellaneous**   37,012     37,016   2.9     
Materials   10,566     17,306   1.3     
    702,148     1,331,961   103.9     
Short-Term Securities   143,711     143,711   11.2     
Total Investments $845,859     1,475,672   115.1     
Other Assets and Liabilities - Net         (3,281) (0.3)  
Preferred Stock         (190,117) (14.8)  
Net Assets Applicable to Common Stock       $1,282,274   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 unaudited financial statements)


 


ASSETS          
INVESTMENTS, AT VALUE (NOTE 1a)          
Common stocks (cost $701,914,610)       $1,331,823,334
Purchased option (cost $233,010)         138,000
Money market fund (cost $143,711,541)         143,711,541
              Total investments (cost $845,859,161)         1,475,672,875
 
RECEIVABLES AND OTHER ASSETS          
Cash held by custodian in segregated account* $934,160      
Receivable for securities sold   5,644,879      
Dividends, interest and other receivables, net   3,195,767      
Qualified pension plan asset, net excess funded (note 7)   5,151,529      
Prepaid expenses and other assets   1,336,878     16,263,213
TOTAL ASSETS         1,491,936,088
LIABILITIES          
Payable for securities purchased   9,321,287      
Accrued preferred stock dividend not yet declared   219,955      
Outstanding option written, at value (premium received $120,987)   210,000      
Accrued supplemental pension plan liability (note 7)   4,670,485      
Accrued supplemental thrift plan liability (note 7)   2,425,776      
Accrued expenses and other liabilities   2,697,065      
 
TOTAL LIABILITIES         19,544,568
 
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 - 29,513,265 shares (note 5)       $1,282,274,345
 
NET ASSET VALUE PER COMMON SHARE       $43.45
 
NET ASSETS APPLICABLE TO COMMON STOCK          
Common Stock, 29,513,265 shares at par value (note 5) $29,513,265      
Additional paid-in capital (note 5)   550,143,544      
Undistributed net investment income (note 5)   4,555,366      
Undistributed realized gain on investments   74,454,590      
Accumulated other comprehensive loss (note 7)   (1,824,244)    
Unallocated distributions on Preferred Stock   (5,875,941)    
Unrealized appreciation on investments and option written   631,307,765      
 
NET ASSETS APPLICABLE TO COMMON STOCK       $1,282,274,345

 

* Collateral for options written.

(see notes to unaudited financial statements)


 


INCOME          
Dividends (net of foreign withholding taxes of $579,093)       $11,585,133
Interest         458
          11,585,591
EXPENSES           
Investment research $3,660,179      
Administration and operations   1,919,529      
Office space and related expenses   844,333      
Auditing and legal fees   131,306      
Transfer agent, custodian and registrar fees and expenses   82,041      
State and local taxes   79,958      
Stockholders’ meeting and reports   63,205      
Directors’ fees and expenses   58,135     6,838,686
NET INVESTMENT INCOME         4,746,905
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 $3,671,778)   70,201,135      
Written option transactions (notes 1b and 4)   543,192      
    70,744,327      
Net decrease in unrealized appreciation on investments and option written   (2,189,756)    
NET GAIN ON INVESTMENTS         68,554,571
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS         (5,655,986)
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS       $67,645,490

 


    Six Months Ended      
    June 30, 2014     Year Ended
OPERATIONS   (Unaudited)     December 31, 2013
Net investment income $4,746,905   $5,228,019
Net realized gain on investments   70,744,327     69,657,472
Net increase (decrease) in unrealized appreciation   (2,189,756)   243,076,683
    73,301,476     317,962,174
Distributions to Preferred Stockholders:          
From net investment income   —     (992,168)
From long-term capital gains   —     (10,319,804)
Unallocated distributions   (5,655,986)   —
Decrease in net assets from Preferred distributions   (5,655,986)   (11,311,972)
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   67,645,490     306,650,202
OTHER COMPREHENSIVE INCOME - Funded status of defined benefit plans (note 7)   —     5,948,555
DISTRIBUTIONS TO COMMON STOCKHOLDERS          
From net investment income   —     (5,382,759)
From long-term capital gains   —     (55,987,513)
DECREASE IN NET ASSETS FROM COMMON DISTRIBUTIONS   —     (61,370,272)
CAPITAL SHARE TRANSACTIONS (NOTE 5)          
Value of Common Shares issued in payment of dividends and distributions   —     35,871,304
Cost of Common Shares purchased   (14,840,891)   (13,047,704)
INCREASE (DECREASE) IN NET ASSETS - CAPITAL TRANSACTIONS   (14,840,891)   22,823,600
NET INCREASE IN NET ASSETS   52,804,599     274,052,085
 
NET ASSETS APPLICABLE TO COMMON STOCK          
BEGINNING OF PERIOD   1,229,469,746     955,417,661
END OF PERIOD (including undistributed net investment income (loss) of $4,555,366 and          
($191,539), respectively) $1,282,274,345   $1,229,469,746

 

(see notes to unaudited financial statements)


 


The following table shows per share operating performance data, total investment return, ratios and supplemental data for the six months ended
June 30, 2014 and for each year in the five-year period ended December 31, 2013. This information has been derived from information contained in
the financial statements and market price data for the Company’s shares.

  Six months                    
  Ended                    
  June 30, 2014       Year Ended December 31,    
  (Unaudited)   2013   2012   2011   2010   2009
 
PER SHARE OPERATING PERFORMANCE                      
Net asset value, beginning of period $41.07 $32.68   $29.78 $31.26 $27.50 $21.09
Net investment income .16   .17   .24   .18   .19   .11
Net gain (loss) on securities -                      
realized and unrealized 2.41   10.51   5.05   (.68)   4.37   6.94
Other comprehensive income (loss) —   .20   —   (.10)   —   .07
  2.57   10.88   5.29   (.60)   4.56   7.12
Distributions on Preferred Stock:                      
Dividends from net investment income —   (.04) (.04)   (.11)   (.07)   (.11)
Distributions from net short-term capital gains —   —   (.01)   (.01)   (.03)   (.05)
Distributions from net long-term capital gains —   (.35) (.34)   (.26)   (.27)   (.19)
Distributions from return of capital —   —   —   —   —   (.01)
Unallocated (.19)   —   —   —   —   —
  (.19)   (.39) (.39)   (.38)   (.37)   (.36)
Total from investment operations 2.38   10.49   4.90   (.98)   4.19   6.76
Distributions on Common Stock:                      
Dividends from net investment income —   (.18) (.21)   (.15)   (.08)   (.10)
Distributions from net short-term capital gains —   —   (.02)   (.01)   (.03)   (.05)
Distributions from net long-term capital gains —   (1.92) (1.77)   (.34)   (.32)   (.19)
Distributions from return of capital —   —   —   —   —   (.01)
  —   (2.10) (2.00)   (.50)   (.43)   (.35)
 
Net asset value, end of period $43.45 $41.07   $32.68 $29.78 $31.26 $27.50
Per share market value, end of period $36.82 $35.20   $27.82 $24.91 $26.82 $23.46
TOTAL INVESTMENT RETURN - Stockholder                      
return, based on market price per share 4.60%*   34.24% 19.77%   (5.29%)   16.24%   36.86%
 
RATIOS AND SUPPLEMENTAL DATA                      
Net assets applicable to Common Stock,                      
end of period (000’s omitted) $1,282,274   $1,229,470   $955,418 $886,537 $950,941 $864,323
Ratio of expenses to average net assets                      
applicable to Common Stock 1.12%**   1.27% 1.67%   1.39%   1.54%   1.93%
Ratio of net investment income to average net assets                      
applicable to Common Stock 0.78%**   0.47% 0.74%   0.56%   0.66%   0.46%
Portfolio turnover rate 8.08%*   17.12% 9.56%   11.17%   18.09%   24.95%
 
PREFERRED STOCK                      
Liquidation value, end of period (000’s omitted) $190,117   $190,117   $190,117 $190,117 $190,117 $190,117
Asset coverage 774%   747% 603%   566%   600%   555%
Liquidation preference per share $25.00 $25.00   $25.00 $25.00 $25.00 $25.00
Market value per share $25.52 $25.30   $25.54 $25.47 $24.95 $24.53

 

*Not annualized **Annualized

(see notes to unaudited 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 (“U.S. GAAP”)
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 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. The determination of fair value involves subjective judgments. As a
result, using fair value to price a security may result in a price materially different from the price used by other investors or the price
that may be realized upon the actual sale of the security.
 
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 securities 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 distribu-
tions to common and preferred shareholders, which are determined in accordance with Federal income tax regulations are recorded
on the ex-dividend date. 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 cations.
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 June 30, 2014:

 

Assets   Level 1   Level 2 Level 3   Total
Common stocks $1,317,097,084   — $14,726,250 $1,331,823,334
Purchased option   138,000   — —   138,000
Money market fund   143,711,541   — —   143,711,541
     Total $1,460,946,625   — $14,726,250 $1,475,672,875
Liabilities              
Option written ($210,000)     ($210,000)

 

The aggregate value of Level 3 portfolio investments changed during the six months ended June 30, 2014 as follows:
Change in portfolio valuations using signifi cant unobservable inputs: Level 3
Fair value at December 31, 2013 $32,637,795
Realized Gain 8,179,247
Net change in unrealized appreciation on investments (5,580,497)
Proceeds from sale (20,510,295)
Fair value at June 30, 2014 $14,726,250
The amount of net unrealized loss included in the results of operations attributable to  
Level 3 assets held at June 30, 2014 and reported within the caption Net decrease  
in unrealized appreciation in the Statement of Operations: $2,598,750

 

Transfers, if any, are reported as of the end of the reporting period.There were no transfers between levels during the period ended
June 30, 2014.
 
3. PURCHASES AND SALES OF SECURITIES - Purchases and sales of securities (other than short-term securities and options) for the six
months ended June 30, 2014 amounted to $104,680,167 and $161,846,802, on long transactions, respectively.
 
4. WRITTEN OPTIONS - The level of activity in written options varies from year to year based upon market conditions. Transactions in
written covered call options and collateralized put options during the six months ended June 30, 2014 were as follows:

 

  Covered Calls   Collateralized Puts
  Contracts     Premiums   Contracts     Premiums
Options outstanding, December 31, 2013 1,200   $29,628   0   $0
Options written 3,000     241,974   5,800     818,553
Options exercised (250)   (161,738) (1,500)   (147,489)
Options expired (523)   (37,375) (2,500)   (57,940)
Options terminated in closing purchase transaction (1,927)   (151,502) (1,800)   (613,124)
Options outstanding, June 30, 2014 1,500   $120,987   0   $0

 

The maximum payout for written put options is limited to the number of put option contracts written and outstanding and the related
strike prices; currently, none are outstanding. The fair value of the covered call option contract at June 30, 2014 is $210,000.
 
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, 29,513,265 shares
were issued and outstanding; 8,000,000 Preferred Shares were originally issued and 7,604,687 were outstanding on June 30, 2014.
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. 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 six months ended June 30, 2014 and the year ended December 31, 2013 were as follows:

 

  Shares     Amount
  2014   2013     2014   2013
Shares issued in payment of dividends and distributions                
(includes 1,090,772 shares issued from treasury) —   1,090,772     —   $1,090,772
Increase in paid-in capital           —   34,780,532
Total increase           —   35,871,304
Shares purchased (at an average discount from net asset value                
of 14.6% and 14.3%, respectively) (426,303)   (385,176) ($426,303)   (385,176)
Decrease in paid-in capital           (14,414,588)   (12,662,528)
Total decrease           (14,840,891)   (13,047,704)
Net increase (decrease) (426,303)   705,596   ($14,840,891)   $22,823,600

 

At June 30, 2014, the Company held in its treasury 2,467,607 shares of Common Stock with an aggregate cost in the amount of $72,811,380.
The tax basis distributions during the year ended December 31, 2013 are as follows: ordinary distributions of $6,746,658 and long-term
capital gains distributions of $65,935,586. As of December 31, 2013, distributable earnings on a tax basis included $3,963,127 from
undistributed net long-term capital gains and $633,497,521 from net unrealized appreciation on investments if realized in future years.
Reclassifications arising from permanent “book/tax” differences reflect non-tax deductible expenses and redesignation of dividends during
the year ended December 31, 2013. As a result, undistributed net investment loss was decreased by $8,208 and additional paid-in capital was
decreased by $1,014 and undistributed net realized gain on securities sold was decreased by $7,194. As of December 31, 2013 the Company
had straddle loss deferrals of $252,864. Net assets were not affected by this reclassification.
 
6. OFFICERS’ COMPENSATION - The aggregate compensation accrued and paid by the Company during the six months ended June 30,
2014 to its offi cers (identifi ed on back cover) amounted to $3,419,750.
 
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 pension 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 benefi t cost (income) of the plans
for the six months ended June 30, 2014 were:

 

Service cost $233,100  
Interest cost   437,508  
Expected return on plan assets   (564,793)
Amortization of prior service cost   23,293  
Amortization of recognized net actuarial loss   223,951  
 
Net periodic benefi t cost $353,059  

 

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
employees. The aggregate cost of such plans for the six months ended June 30, 2014 was $281,440. The qualifi ed thrift plan acquired
10,199 shares of the Company’s Common Stock during the six months ended June 30, 2014 and held 495,200 shares of the Company’s
Common Stock at June 30, 2014.
 
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 $552,400 for the six months ended June 30, 2014. Minimum rental commitments
under the operating lease are approximately $1,183,000 in 2014 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, 2014 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 May 16, 2014, the Company submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the Company’s princi-
pal 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 Jeffrey W. Priest
John D. Gordan, III Raymond S. Troubh
(*The Company is a stand-alone fund.)

 

OFFICERS
Jeffrey W. Priest, President and Chief Executive Officer
Andrew V. Vindigni, Senior Vice-President
Craig A. Grassi, Vice-President
Sally A. Lynch, Vice-President
Michael W. Robinson, Vice-President
Eugene S. Stark, Vice-President, Administration, Principal
Financial Officer & Chief Compliance Officer
Diane G. Radosti, Treasurer
Maureen E. LoBello, Corporate Secretary
Linda J. Genid, Assistant Corporate Secretary

 

SERVICE COMPANIES
COUNSEL TRANSFER AGENT AND REGISTRAR
Sullivan & Cromwell LLP American Stock Transfer & Trust
INDEPENDENTAUDITORS Company, LLC
Ernst & Young LLP 6201 15th Avenue
  Brooklyn, NY 11219
CUSTODIAN 1-800-413-5499
State Street Bank and www.amstock.com
Trust Company  

 

REVIEW REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
GENERAL AMERICAN INVESTORS COMPANY, INC.
We have reviewed the accompanying statement of assets and liabilities
of General American Investors Company, Inc., (the “Company”) includ-
ing the statement of investments and statement of option written, as of
June 30, 2014, and the related statements of operations, changes in net
assets and financial highlights for the six-month period ended June 30,
2014. These financial statements and financial highlights are the respon-
sibility of the Company’s management.  
We conducted our review in accordance with the standards of the
Public Company Accounting Oversight Board (United States). A review
of interim financial information consists principally of applying analyti-
cal procedures and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements referred to above
for them to be in conformity with U.S. generally accepted accounting
principles.  
We have previously audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the state-
ment of assets and liabilities of General American Investors Company,
Inc., including the statement of investments and statement of option writ-
ten, as of December 31, 2013, and the related statements of operations,
changes in net assets and financial highlights for each of the five years in
the period then ended and we expressed an unqualified audit opinion on
those financial statements in our report, dated February 7, 2014.
 
New York, New York ERNST & YOUNG LLP
August 1, 2014  

 


 

ITEM 2. CODE OF ETHICS.

 

Not applicable to this semi-annual report.

 

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

 

Not applicable to this semi-annual report.

 

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

Not applicable to this semi-annual report.

 

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

 

Not applicable to this semi-annual report.

 

ITEM 6. SCHEDULE OF INVESTMENTS

 

The schedule of investments in securities of unaffiliated issuers is included as

part of the report to stockholders filed under Item 1 of this form.

 

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END

MANAGEMENT INVESTMENT COMPANIES.

 

Not applicable to this semi-annual report.

 

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

 

Not applicable to this semi-annual report.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

 

(a) General American Investors Company, Inc. Common Stock (GAM)

 

 

Period

(a) Total Number

(b) Average Price

(c) Total Number of Shares

(d) Maximum Number (or Approximate

 

2013

of shares (or Units)

Paid per Share

(or Units) Purchased as Part

Dollar Value) of Shares (or Units)

 

 

Purchased

(or Unit)

of Publicly Announced Plans

that May Yet Be Purchased Under

 

 

 

 

or Programs

the Plans or Programs

 

01/01-01/31

105,919

34.4234

105,919

309,190

 

02/01-02/28

153,196

33.9651

153,196

155,994

 

03/01-03/31

60,022

35.0400

60,022

95,972

 

04/01-04/30

21,016

35.1047

21,016

1,074,956

 

05/01-05/31

0

0

0

1,074,956

 

06/01-06/30

86,150

36.5704

86,150

988,806

 

 

 

 

 

 

 

Total for year

426,303

 

426,303

 

 

 

 

 

 

 

 

 

Note-

On April 16, 2014, the Board of Directors authorized the repurchase of an additional 1,000,000 shares of the

 

 

registrant’s common stock when the shares are traded at a discount from the underlying net asset value of at least 8%.

 

 

This represents a continuation of the repurchase program which began in March 1995.

 

 

As of the beginning of the period, January 1, 2014, there were 415,109 shares available for repurchase under the

 

 

aforementioned extension of such authorization. As of the end of the period, June 30, 2014,

 

 

there were 988,806 shares available for repurchase under this program.

 

 

 

 

(b) General American Investors Company, Inc. Preferred Stock (GAMpB)

 

 

 

Period

(a) Total Number

(b) Average Price

(c) Total Number of Shares

(d) Maximum Number (or Approximate

 

 

2013

of shares (or Units)

Paid per Share

(or Units) Purchased as Part

Dollar Value) of Shares (or Units)

 

 

 

Purchased

(or Unit)

of Publicly Announced Plans

that May Yet Be Purchased Under

 

 

 

 

 

or Programs

the Plans or Programs

 

 

01/01-01/31

-

 

-

604,687

 

 

02/01-02/28

-

 

-

604,687

 

 

03/01-03/31

-

 

-

604,687

 

 

04/01-04/30

-

 

-

604,687

 

 

05/01-05/31

-

 

-

604,687

 

 

06/01-06/30

-

 

-

604,687

 

 

 

 

 

 

 

 

 

Total

0

 

0

 

 

 

 

 

 

 

 

 

 

Note-

The Board of Directors has authorized the repurchase of the registrant's preferred stock

 

 

when the shares are trading at a price not in excess of $25.00 per share.

 

 

As of the beginning of the period, January 1, 2013, there were 604,687 shares available

 

 

for repurchase under such authorization. As of the end of the period, June 30, 2013,

 

 

there were 604,687 shares available for repurchase under this program.

 

 ITEM 10.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

There have been no material changes to the procedures by which shareholders may

recommend nominees to the registrant's  Board of Directors as set forth in the

registrant's Proxy Statement, dated February 28, 2014.

 

ITEM 11. CONTROLS AND PROCEDURES.

 

Conclusions of principal officers concerning controls and procedures

 

(a) As of June 30, 2014, an evaluation was performed  under the  supervision and with  the  participation  of the  officers  of  General  American  Investors Company,  Inc. (the  "Registrant"),  including the principal  executive  officer ("PEO") and principal  financial officer ("PFO"), to assess the effectiveness of the Registrant's  disclosure controls and procedures.  Based on that evaluation, the  Registrant's  officers,  including the PEO and PFO,  concluded  that, as of June 30, 2014, the  Registrant's  disclosure  controls and  procedures  were reasonably  designed  so as to  ensure:  (1)  that  information  required  to be disclosed  by the  Registrant  on  Form  N-CSR   is  recorded, processed,  summarized  and reported  within the time  periods  specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information  relating  to the  Registrant  is made  known  to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure.

 

(b) There have been no significant changes in the Registrant's internal control

over financial reporting  (as defined in Rule  30a-3(d)  under the  Investment

Company Act of 1940 (17 CFR 270.30a-3(d))  that occurred during the Registrant's

last fiscal quarter that has  materially  affected,  or is reasonably  likely to

materially affect, the Registrant's internal control over financial reporting.

 

ITEM 12. EXHIBITS

 

(a)(1) The code of ethics disclosure required by Item 2 is not applicable to

this semi-annual report.

 

(a)(2)  Certifications  of the  principal  executive  officer and the  principal

financial officer pursuant to Rule 30a-2(a)under the Investment Company Act of

1940.

 

(a)(3) There were no written  solicitations  to purchase  securities  under Rule

23c-1 under the Investment  Company Act of 1940 during the period covered by the

report.

 

(b)  Certifications  of  the  principal  executive  officer  and  the  principal

financial officer, as required by Rule 30a-2(b) under the Investment Company Act

of 1940.

 

 

SIGNATURES

 

  Pursuant to the requirements of the Securities Exchange Act of 1934 and

the Investment Company Act of 1940, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

 

General American Investors Company, Inc.

 

By:       /s/Eugene S. Stark

Eugene S. Stark

Vice-President, Administration

 

Date: August 1, 2014

 

  Pursuant to the requirements of the Securities Exchange Act of 1934 and

the Investment Company Act of 1940, this report has been signed below by the

following persons on behalf of the registrant and in the capacities and on the

dates indicated.

 

By:       /s/Jeffrey W. Priest

            Jeffrey W. Priest

President and Chief Executive Officer

(Principal Executive Officer)

 

Date: August 1, 2014

 

By:       /s/Eugene S. Stark

Eugene S. Stark

Vice-President, Administration

(Principal Financial Officer)

 

Date: August 1, 2014