General American Investors Company, Inc. Annual Report 2011

FY2011 Annual Report · General American Investors Company, Inc.

Loading PDF…

General American Investors Company, Inc.
100 Park Avenue, New York, NY 10017
(212) 916-8400 (800) 436-8401
E-mail: InvestorRelations@gainv.com
www.generalamericaninvestors.com

G E N E R A L
A M E R I C A N
I N V E S T O R S

2 0 1 1
A N N U A L
R E P O R T

GENERAL AMERICAN INVESTORS COMPANY, INC.

Established in 1927, the Company is a closed-end investment company listed on the

New York Stock Exchange. Its objective is long-term capital appreciation through

investment in companies with above average growth potential.

FINANCIAL SUMMARY (unaudited)

Net assets applicable to Common Stock -
December 31
Net investment income
Net realized gain
Net increase (decrease) in unrealized appreciation
Distributions to Preferred Stockholders

Per Common Share-December 31
Net asset value
Market price
Discount from net asset value

Common Shares outstanding-Dec. 31
Market price range* (high-low)
Market volume-shares

*Unadjusted for dividend payments.

2011

2010

$886,537,370
5,295,369
19,507,647
(42,899,858)
(11,311,972)

$29.78
$24.91
-16.4%

$950,940,936
5,626,730
19,636,107
109,245,534
(11,311,972)

$31.26
$26.82
-14.2%

29,766,389
$28.68-$21.80
10,308,012

30,423,294
$26.85-$21.01
13,189,863

DIVIDEND SUMMARY (per share) (unaudited)

Record Date

Payment Date

Ordinary
Income

Long-Term
Capital Gain

Total

Common Stock

Nov. 14, 2011
Total from 2011 earnings

Dec. 23, 2011

$.158060 (a)

$.341940

$.500000

(a) Includes short-term gains in the amount of $.011020 per share.

Nov. 12, 2010
Total from 2010 earnings

Dec. 23, 2010

$.113718 (b)

$.316282

$.430000

(b) Includes short-term gains in the amount of $.033411 per share.

Preferred Stock

Mar. 7, 2011
Jun. 7, 2011
Sept. 7, 2011
Dec. 7, 2011
Total for 2011

Mar. 24, 2011
Jun. 24, 2011
Sept. 26, 2011
Dec. 27, 2011

$.117557
.117557
.117557
.117557
$.470228 (c)

$.254318
.254318
.254318
.254318
$1.017272

$.371875
.371875
.371875
.371875
$1.487500

Mar. 8, 2010
Jun. 7, 2010
Sept. 7, 2010
Dec. 7, 2010
Total for 2010

Mar. 24, 2010
Jun. 24, 2010
Sept. 24, 2010
Dec. 27, 2010

$.098348
.098348
.098348
.098348
$.393392 (d)

$.273527
.273527
.273527
.273527
$1.094108

$.371875
.371875
.371875
.371875
$1.487500

(d) Includes short-term gains in the amount of $.115577 per share ($.02889425 per quarter).

General American Investors Company, Inc.
100 Park Avenue, New York, NY 10017
(212) 916-8400 (800) 436-8401
E-mail: InvestorRelations@gainv.com
www.generalamericaninvestors.com

T O T H E S T O C K H O L D E R S

G e n e r a l A m e r i c a n I n v e s t o r s

General American Investors’ net asset value (NAV)

per Common Share (assuming reinvestment of
all dividends) decreased 2.9% for the year ended

December 31, 2011. The U.S. stock market was up
2.1% for the year, as measured by our benchmark, the
Standard & Poor’s 500 Stock Index (including income).
The return to our Common Stockholders decreased by
5.3% and the discount at which our shares traded to
their NAV continued to fluctuate and on December 31,
2011, it was 16.4%.

The table that follows provides a comprehensive pre-
sentation of our performance and compares our returns
on an annualized basis with the S&P 500. Stockholder
return reflects widening in the discount to NAV to the
high end of its historic range, and may not fully illus-
trate that over many years General American Investors
has produced superior investment results.

Years

Stockholder Return
(Market Value)

NAV Return

S&P 500

14.6%

13.9%

14.1%

-3.3

1.6

8.3

11.4

12.1

11.2

-1.9

2.5

8.7

12.1

11.5

-0.3

2.9

7.8

11.0

9.8

9.2

2011, like the previous ten years, was challenging, with
virtually all gains in the indices coming from dividend
income. It was characterized by extreme volatility,
which was manifested in a series of sharp rallies fol-
lowed by equally pronounced selloffs in response,
presumably, to a succession of exogenous events. These
included the natural disasters in the Far East, the po-
litical chaos in the Middle East and North Africa, the
sovereign debt and bank crisis in Europe, and, domes-
tically, the loss of our AAA credit rating. While U.S.
markets performed better than the rest of the world,
equity prices ended the year twelve percent lower than
their 2006 peak, when measured in inflation adjusted
terms. Similarly, efforts to stimulate employment and
stabilize the housing market met with mixed results.

As the year unfolds, it seems reasonable to assume that
the U.S. will continue to experience sub-par growth rel-
ative to past recoveries from deep recessions. Efforts to
reduce public debt, which has reached almost 100% of
GDP, together with higher private savings, necessitated
by unsustainable growth in entitlement spending, are
likely to have a direct impact on economic activity.
European growth will almost certainly be depressed
as its banks deleverage and the Euro zone’s existential
crisis continues. Much has been written about the
imbalances in the Chinese economy; critics note that
consumption has been sacrificed in favor of high capi-

tal investment in support of exports, resulting in a very
large current account surplus. It is argued, further, that
real estate in particular is overbuilt and that China will
go the way of all state-directed abusers of credit. While
this scenario may eventually come to pass, China ap-
pears to be succeeding in its rebalancing effort, with
consumption on the rise and the demand for mid-and
high-quality goods and services rising along with it.

Many of the problems associated with slower economic
growth appear to be already reflected in security prices.
While it is not likely that interest rates will continue
to decline in concert with increased borrowing, their
current levels suggest a compelling case for equities.
Whether the metric is price to earnings ratio, free cash
flow, or dividend yield, stocks appear to be priced at
undemanding valuations. With a firm dollar, the U.S.
may well remain the destination of choice for capital,
and our portfolio, focused on well-managed companies
with strong financial characteristics, should benefit.

As part of an ongoing effort to maximize shareholder
value, over 3% of the Company’s shares were repur-
chased in 2011 at an average discount to NAV of 14.6%.
The Board of Directors has authorized repurchases of
Common Shares when they are trading at a discount to
NAV of at least 8%.

In December 2012, the Board of Directors renewed au-
thority originally granted in 2008 to repurchase up to
1 million outstanding shares of its 5.95% Cumulative
Preferred Stock when the shares are trading at a market
price below the liquidation preference of $25.00 per
share.

We are pleased to announce that as of today, Mr. Jeffrey
W. Priest was appointed President of the Company. Mr.
Priest joined the Company in October 2010 and has
spent his entire 26-year business career in the investment
management and financial services industry.

Information about the Company, including our invest-
ment objectives, operating policies and procedures,
investment results, record of dividend payments, finan-
cial reports and press releases, etc., is available on our
website, which can be accessed at
www.generalamericaninvestors.com.

By Order of the Board of Directors,

Spencer Davidson
Chairman of the Board
and Chief Executive Officer
February 1, 2012

T H E C O M P A N Y

G e n e r a l A m e r i c a n I n v e s t o r s

Corporate
Overview

General American Investors,
established in 1927, is one
of the nation’s oldest closed-
end investment companies.
It is an independent organi-
zation that is internally managed. For regu-
latory purposes, the Company is classified
as a diversified, closed-end management
investment company; it is registered under
and subject to the Investment Company
Act of 1940 and Sub-Chapter M of the
Internal Revenue Code.

Investment
Policy

The primary objective of
the Company is long-term
capital appreciation. Lesser
emphasis is placed on cur-
rent income. In seeking to
achieve its primary objective, the Company
invests principally in common stocks
believed by its management to have better
than average growth potential.

The Company’s investment approach
focuses on the selection of individual
stocks, each of which is expected to meet
a clearly defined portfolio objective. A
continuous investment research program,
which stresses fundamental security analy-
sis, is carried on by the officers and staff of
the Company under the oversight of the
Board of Directors. The Directors have a
broad range of experience in business and
financial affairs.

Portfolio
Manager

Mr. Spencer Davidson,
Chairman of the Board and
Chief Executive Officer, has
been responsible for
the management of

the Company since August 1995. Mr.
Davidson, who joined the Company in
1994 as senior investment counselor, has
spent his entire business career on Wall
Street since first joining an investment and
banking firm in 1966.

“GAM”
Common
Stock

As a closed-end investment
company, the Company does
not offer its shares continu-
ously. The Common Stock is
listed on The New York Stock
Exchange (symbol, GAM) and can be bought
or sold in the same manner as all listed stocks.
Net asset value is computed and published on
the Company’s website daily (on an unaudited
basis) and is also furnished upon request. It
is also available on most electronic quotation
services using the symbol “XGAMX.” Net
asset value per share (NAV), market price, and
the discount or premium from NAV as of the
close of each week, is published in Barron’s and
The Wall Street Journal, Monday edition.

While shares of the Company usually sell at
a discount to NAV, as do the shares of most
other domestic equity closed-end invest-
ment companies, they occasionally sell at a
premium over NAV. During 2011, the stock
sold at discounts to NAV which ranged from
11.4% (March 7) to 16.8% (December 22). At
December 31, the price of the stock was at a
discount of 16.4%.

Since March 1995, the Board of Directors has
authorized the repurchase of Common Stock
in the open market when the shares trade at a
discount to net asset value of at least 8%.

“GAM Pr B”
Preferred
Stock

On September 24, 2003, the
Company issued and sold
in an underwritten offering
8,000,000 shares of its 5.95%
Cumulative Preferred Stock,
Series B with a liquidation preference of $25
per share ($200,000,000 currently in the aggre-
gate). The Preferred Shares are rated “Aaa” by
Moody’s Investors Service, Inc. and are listed
and traded on The New York Stock Exchange
(symbol, GAM Pr B). The Preferred Shares are
available to leverage the investment perfor-
mance of the Common Stockholders, it may
also result in higher market volatility for the
Common Stockholders.

T H E C O M P A N Y

G e n e r a l A m e r i c a n I n v e s t o r s

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 per share.

Direct
Registration

The Company makes avail-
able direct registration for
its Common Shareholders.
Direct registration, which is an

Dividend
and
Distribution
Policy

The Company’s dividend and
distribution policy is to dis-
tribute to stockholders before
year-end substantially all or-
dinary income estimated for
the full year and capital gains realized during
the ten-month period ended October 31 of
that year. Ordinarily, if any additional capital
gains are realized and available or ordinary
income is earned during the last two months
of the year, a “spill-over” distribution of these
amounts may be paid. Dividends and distri-
butions on shares of Preferred Stock are paid
quarterly. Distributions from capital gains and
dividends from ordinary income are allocated
proportionately among holders of shares of
Common Stock and Preferred Stock.

Dividends from income have been paid con-
tinuously on the Common Stock since 1939
and capital gain distributions in varying
amounts have been paid for each of the years
1943-2011 (except for the year 1974). (A table
listing dividends and distributions paid during
the 20-year period 1992-2011 is shown at the
bottom of page 4.) To the extent that shares
can be issued, dividends and distributions are
paid to Common Stockholders in additional
shares of Common Stock unless the stockhold-
er specifically requests payment in cash.

Proxy Voting
Policies,
Procedures
and Record

The policies and procedures
used by the Company to de-
termine how to vote proxies
relating to portfolio securi-
ties and the Company’s
proxy voting record for the

12-month period ended June 30, 2011 are
available: (1) without charge, upon request, by
calling the Company at its toll-free number (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.

element of the Investors Choice Plan admin-
istered by our transfer agent, is a system that
allows for book-entry ownership and electronic
transfer of our Common Shares. Accordingly,
when Common Shareholders, who hold their
shares directly, receive new shares resulting
from a purchase, transfer or dividend pay-
ment, they will receive a statement showing
the credit of the new shares as well as their
Plan account and certificated share balances.
A brochure which describes the features and
benefits of the Investors Choice Plan, includ-
ing the ability of shareholders to deposit
certificates with our transfer agent, can be
obtained by calling American Stock Transfer
& Trust Company at 1-800-413-5499, calling
the Company at 1-800-436-8401 or visiting
our website: www.generalamericaninvestors.
com - click on Distribution & Reports, then Report
Downloads.

Privacy
Policy and
Practices

The Company collects non-
public personal information
about its customers (stock-
holders) with respect to their
transactions in shares of the
Company’s securities but

only for those stockholders whose shares are
registered in their names. This information
includes the stockholder’s address, tax identifi-
cation or Social Security number and dividend
elections. We do not have knowledge of, nor
do we collect personal information about,
stockholders who hold the Company’s securi-
ties at financial institutions in “street name”
registration.

We do not disclose any nonpublic personal
information about our current or former stock-
holders to anyone, except as permitted by law.
We also restrict access to nonpublic personal
information about our stockholders to those
few employees who need to know that infor-
mation to perform their responsibilities. We
maintain safeguards that comply with federal
standards to guard our stockholders’ personal
information.

I N V E S T M E N T R E S U L T S ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

Total return on $10,000
investment for 20 years
ended December 31, 2011

T he investment return for a Common Stockholder of General American Investors (GAM)

over the 20 years ended December 31, 2011 is shown in the table below and in the
accompa ny ing chart. The return based on GAM’s net asset value (NAV) per Common

Share in comparison to the change in the Standard & Poor’s 500 Stock Index (S&P 500) is also
displayed. Each illustration assumes an investment of $10,000 at the beginning of 1992.

Stockholder Return is the return a Common Stock holder of GAM would have achieved assum-
ing reinvestment of all dividends and distributions at the actual reinvestment price and of all
cash dividends at the average (mean between high and low) market price on the ex-dividend
date.

Net Asset Value (NAV) Return is the return on shares of the Company’s Common Stock based
on the NAV per share, including the reinvestment of all dividends and distributions at the rein-
vestment prices indicated above.

Standard & Poor’s 500 Return is the time-weighted total rate of return on this widely-recog-
nized, unmanaged index which is a measure of general stock market performance, including
dividend income.

Past performance may not be indicative of future results.

GENERAL AMERICAN INVESTORS

STANDARD & POOR’S 500

STOCKHOLDER RETURN

NET ASSET VALUE RETURN

RETURN

CUMULATIVE
INVESTMENT

$11,478

ANNUAL
RETURN

CUMULATIVE
INVESTMENT

ANNUAL
RETURN

CUMULATIVE
INVESTMENT

ANNUAL
RETURN

14.78%

$10,355

3.55%

$10,759

7.59%

9,651

8,892

10,779

12,879

18,363

24,112

33,569

39,980

41,711

30,362

38,563

41,952

49,252

57,516

62,532

32,391

44,331

51,530

48,804

-15.92

-7.86

21.22

19.48

42.58

31.31

39.22

19.10

4.33

-27.21

27.01

8.79

17.40

16.78

8.72

-48.20

36.86

16.24

-5.29

10,174

9,895

12,228

14,670

19,372

26,179

35,709

42,008

41,504

31,950

40,704

44,925

52,202

58,592

63,285

36,060

47,628

54,920

53,344

-1.75

-2.74

23.58

19.97

32.05

35.14

36.40

17.64

-1.20

-23.02

27.40

10.37

16.20

12.24

8.01

-43.02

32.08

15.31

-2.87

11,848

11,998

16,498

20,277

27,036

34,754

42,039

38,217

33,673

26,218

33,706

37,343

39,147

45,277

47,726

30,034

37,979

43,699

44,631

10.12

1.27

37.50

22.91

33.33

28.55

20.96

-9.09

-11.89

-22.14

28.56

10.79

4.83

15.66

5.41

-37.07

26.45

15.06

2.13

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

This table shows divi-
dends and distributions
on the Company’s
Common Stock for the
prior 20-year period.
Amounts shown are
based upon the year
in which the income
was earned, not the
year paid. Spill-over
payments made after
year-end are attributable
to income and gains
earned in the prior year.

D I V I D E N D S A N D D I S T R I B U T I O N S P E R C O M M O N S H A R E ( 1 9 9 2 - 2 0 1 1 ) ( U N A U D I T E D )

EARNINGS SOURCE

SHORT-TERM

LONG-TERM RETURN OF

SHORT-TERM

LONG-TERM RETURN OF

YEAR INCOME CAPITAL GAINS CAPITAL GAINS CAPITAL

1992 $.03
.06
1993
.06
1994
.10
1995
.20
1996
.21
1997
.47
1998
.42
1999
.48
2000
2001
.37

—
—
—
$.03
.05
—
—
.62
1.55
.64

—
$2.93
—
2.34
—
1.59
—
2.77
—
2.71
—
2.95
—
4.40
—
4.05
6.16
—
1.37 —

2002 $.03
.02
2003
.217
2004
.547
2005
.334
2006
.706
2007
.186
2008
.103
2009
.081
2010
.147
2011

—
—
—
$.041
—
.009
—
.051
.033
.011

$.33
.59
.957
1.398
2.666
5.25

.254
.186
.316
.342

—
—
—
—
—
—
—
$.01
—
—

I N V E S T M E N T R E S U L T S ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

20-YEAR INVESTMENT RESULTS

ASSUMING AN INITIAL

INVESTMENT OF $10,000

CUMULATIVE VALUE

OF INVESTMENT

COMPARATIVE ANNUALIZED INVESTMENT RESULTS

YEARS ENDED
DECEMBER 31, 2011

STOCKHOLDER
RETURN

GAM NET
ASSET VALUE

S&P 500
STOCK INDEX

1 year

-5.3 %

-2.9 %

2.1 %

5 years

-3.3

-1.9

-0.3

10 years

15 years

20 years

1.6

9.3

8.3

2.5

9.0

8.7

2.9

5.4

7.8

$80,000

$60,000

$40,000

$20,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

GAM Stockholder Return

GAM Net Asset Value

S&P 500 Stock Index

M A J O R S T O C K C H A N G E S ( a ) : T H R E E M O N T H S E N D E D D E C E M B E R 3 1 , 2 0 1 1 ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

INCREASES

SHARES TRANSACTED

NEW POSITIONS

Freeport-McMoRan Copper & Gold Inc.
Intercell AG
Visteon Corporation

ADDITIONS

PartnerRe Ltd.
Platinum Underwriters Holdings, Ltd.

DECREASES

ELIMINATIONS

Amgen Inc.
MSCI Inc. Class A

REDUCTIONS

Dell Inc.
Teradata Corporation
The Travelers Companies, Inc.

Wal-Mart Stores, Inc.

Xerox Corporation

—
—
—

10,000
35,000

40,000
255,000

190,000
130,000
30,000
20,000
250,000

SHARES HELD

200,000 (b)
413,800 (b)
275,713 (b)

285,000
435,000

—
—

825,000
230,000
150,000
313,000
1,650,000

(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.

P O R T F O L I O D I V E R S I F I C A T I O N ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

The diversification of the

Company’s net assets appli-

cable to its Common Stock

by industry group as of

December 31, 2011 is shown

in the table.

INDUSTRY CATEGORY
Finance and Insurance
Banking
Insurance
Other

Retail Trade
Consumer Products and Services
Oil and Natural Gas
(Including Services)
Computer Software and Systems
Communications and
Information Services
Health Care/Pharmaceuticals
Environmental Control
(Including Services)
Machinery and Equipment
Miscellaneous**
Technology
Aerospace/Defense
Semiconductors
Metals and Mining
Diversified

Short-Term Securities
Total Investments
Other Assets and Liabilities - Net
Preferred Stock
Net Assets Applicable to
Common Stock

COST(000)

VALUE(000)

PERCENT COMMON NET ASSETS*

DECEMBER 31, 2011

$34,006
65,666
36,369
136,041
60,926
98,715

74,984
57,635

38,582
58,451

39,191
23,704
31,292
30,967
22,957
13,464
37,135
1,251
725,295
52,634
$777,929

$36,600
116,186
83,159
235,945
172,761
128,796

102,024
67,516

55,647
52,493

46,976
30,867
29,134
26,034
23,754
24,029
22,849
12,623
1,031,448
52,634
1,084,082
(7,428)
(190,117)

$886,537

4.1%

13.1
9.4
26.6
19.5
14.5

11.5
7.6

6.3
5.9

5.3
3.5
3.3
2.9
2.7
2.7
2.6
1.4
116.3
5.9
122.2
(0.8)
(21.4)

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)

T E N L A R G E S T I N V E S T M E N T H O L D I N G S ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

The statement of
investments as of
December 31, 2011,
shown on pages 8 and 9
includes 55 security
issues. Listed here are
the ten largest holdings
on that date.

THE TJX COMPANIES, INC.
Through its T.J. Maxx and Marshalls divisions, TJX is the leading
off-price retailer. The continued growth of these divisions in the
U.S. and Europe, along with expansion of related U.S. and foreign
off-price formats, provide ongoing growth opportunities.

QUALCOMM INCORPORATED
QUALCOMM is a leading developer of intellectual property and
semiconductors for the mobile communications industry. The
company stands to benefit greatly from the global adoption of
mobile data applications.

EPOCH HOLDING CORPORATION
Epoch is a mid-size global asset management firm serving insti-
tutions, wealthy individuals and as sub-advisor to a number of
mutual funds. The company has a culture of business owner
operators with broad and deep experience in security analysis,
investment portfolio structuring and business management.
Epoch has a very successful history increasing assets under manage-
ment with a compound annual growth rate of 56.5% over the last
seven years.

COSTCO WHOLESALE CORPORATION
Costco is the world’s largest wholesale club with a record of steady
growth in sales and profits as it continues to gain share of the consumer
dollar.

ARCH CAPITAL GROUP LTD.
Arch Capital, a Bermuda-based insurer/reinsurer, generates premiums
of approximately $3.3 billion and has a high quality, well-reserved
A-rated balance sheet. This company has a strong management team
that exercises prudent underwriting discipline, efficient expense
control, and steady capital management resulting in above-average
earnings and book value growth.

DIAGEO PLC ADR
Diageo produces, distills and markets alcoholic beverages worldwide.
The company’s portfolio includes Smirnoff, Johnnie Walker, Jose
Cuervo, Captain Morgan, Tanqueray and Guinness. Additionally,
Diageo markets numerous regional and local brands. The company
generates excess cash flow which it uses to acquire different brands,
pay dividends and buyback its stock.

WEATHERFORD INTERNATIONAL LTD.
Weatherford supplies a broad range of oilfield services and
equipment on a worldwide basis. Its focus on helping customers to
increase production from existing fields and to enhance recovery
from new wells should lead to earnings growth.

APACHE CORPORATION
Apache is a large independent oil and gas company with a long
history of growing production and creating value for shareholders.
The company’s operations are primarily focused in North America,
Egypt, Australia, and the North Sea.

REPUBLIC SERVICES, INC.
Republic Services is a leading provider of non-hazardous, solid
waste collection and disposal services in the U.S. The efficient
operation of its routes and facilities combined with appropriate
pricing enable Republic Services to generate significant free cash
flow.

NESTLE S.A.
Nestle is a well-managed geographically diversified global food
company with a favorably-positioned product portfolio and an
excellent AA-rated balance sheet. Solid volume growth, strong
pricing power, expense control and steady capital management
yield durable above-average long-term total return potential.

*Net assets applicable to the Company’s Common Stock.

VALUE

% COMMON
NET ASSETS*

1,512,400

$97,625,420

11.0%

700,000

38,290,000

4.3

1,666,667

37,050,007

4.2

394,500

32,869,740

3.7

875,000

32,576,250

3.7

350,000

30,597,000

3.5

2,050,000

30,012,000

3.4

296,478

26,854,977

3.0

957,100

26,368,105

3.0

450,000

25,942,680

2.9

$378,186,179 42.7%

S T A T E M E N T O F I N V E S T M E N T S D E C E M B E R 3 1 , 2 0 1 1

G e n e r a l A m e r i c a n I n v e s t o r s

AEROSPACE/DEFENSE
(2.7%)

COMMUNICATIONS AND
INFORMATION SERVICES
(6.3%)

COMPUTER SOFTWARE
AND SYSTEMS (7.6%)

CONSUMER PRODUCTS
AND SERVICES (14.5%)

DIVERSIFIED (1.4%)

ENVIRONMENTAL CON-
TROL (INCLUDING
SERVICES) (5.3%)

FINANCE AND INSURANCE
(26.4%)

COMMON STOCKS

VALUE (NOTE 1a)

325,000 United Technologies Corporation

(COST $22,957,205)

$23,754,250

960,000 Cisco Systems, Inc.
700,000 QUALCOMM Incorporated

60,000 Apple Inc. (a)

825,000 Dell Inc. (a)
770,000 Microsoft Corporation
230,000 Teradata Corporation (a)

350,000 Diageo plc ADR*
450,000 Nestle S.A.
325,000 PepsiCo, Inc.
206,000 Towers Watson & Co. Class A
717,631 Unilever N.V.
275,713 Visteon Corporation (a)

(COST $38,582,394)

(COST $57,634,766)

(COST $98,714,684)

17,356,800
38,290,000
55,646,800

24,300,000
12,069,750
19,989,200
11,157,300
67,516,250

30,597,000
25,942,680
21,563,750
12,345,580
24,578,252
13,769,107
128,796,369

110 Berkshire Hathaway Inc. Class A (a)

(COST $1,250,573)

12,623,050

957,100 Republic Services, Inc.
630,000 Waste Management, Inc.

BANKING (3.9%)

500,000 Bond Street Holdings LLC (a) (b)
520,000 JPMorgan Chase & Co.
110,000 M&T Bank Corporation

INSURANCE (13.1%)

875,000 Arch Capital Group Ltd. (a)
245,000 Everest Re Group, Ltd.

(COST $39,190,474)

(COST $31,140,007)

53,500 Forethought Financial Group, Inc. Class A with Warrants (a) (c)

325,000 MetLife, Inc.
285,000 PartnerRe Ltd.
435,000 Platinum Underwriters Holdings, Ltd.
150,000 The Travelers Companies, Inc.

OTHER (9.4%)

315,000 American Express Company
330,492 Aon Corporation

1,666,667 Epoch Holding Corporation

645,000 Nelnet, Inc.

HEALTH CARE/PHARMA-
CEUTICALS
(5.9%)

170,000 Celgene Corporation (a)
529,900 Cytokinetics, Incorporated (a)
564,500 Gilead Sciences, Inc. (a)
413,800 Intercell AG (a)
755,808 Pfizer Inc.

4,883 Poniard Pharmaceuticals, Inc. (a)

MACHINERY AND EQUIP-
MENT (3.5%)

1,200,000 ABB Ltd. ADR*

900,000 The Manitowoc Company, Inc.

(COST $65,665,838)

(COST $36,368,971)
(COST $133,174,816)

(COST $58,451,455)

(COST $23,703,922)

26,368,105
20,607,300
46,975,405

9,000,000
17,290,000
8,397,400
34,687,400

32,576,250
20,602,050
10,860,500
10,133,500
18,299,850
14,837,850
8,875,500
116,185,500

14,858,550
15,467,026
37,050,007
15,783,150
83,158,733
234,031,633

11,492,000
508,704
23,104,985
1,020,749
16,355,685
10,401
52,492,524

22,596,000
8,271,000
30,867,000

S T A T E M E N T O F I N V E S T M E N T S D E C E M B E R 3 1 , 2 0 1 1 - c o n t i n u e d

G e n e r a l A m e r i c a n I n v e s t o r s

METALS AND MINING
(2.6%)

COMMON STOCKS (Continued)
SHARES
467,700 Alpha Natural Resources, Inc. (a)
200,000
150,000 Nucor Corporation

Freeport-McMoRan Copper & Gold Inc.

VALUE (NOTE 1a)
$9,555,111
7,358,000
5,935,500
22,848,611

(COST $37,134,911)

MISCELLANEOUS (3.3%)

Other (d)

(COST $31,292,109)

29,134,461

OIL AND NATURAL GAS
(INCLUDING SERVICES)
(11.5%)

296,478 Apache Corporation
300,000 Canadian Natural Resources Limited
130,062 Devon Energy Corporation
750,000 Halliburton Company

2,050,000 Weatherford International Ltd. (a)

RETAIL TRADE (19.5%)

394,500 Costco Wholesale Corporation
460,000 Target Corporation
1,512,400 The TJX Companies, Inc.
313,000 Wal-Mart Stores, Inc.

26,854,977
11,211,000
8,063,844
25,882,500
30,012,000
102,024,321

32,869,740
23,561,200
97,625,420
18,704,880
172,761,240

(COST $74,984,196)

(COST $60,926,374)

SEMICONDUCTORS (2.7%)

575,000 ASML Holding N.V.

(COST $13,463,950)

24,029,250

TECHNOLOGY (2.9%)

750,000

International Game Technology

1,650,000 Xerox Corporation

(COST $30,966,849)

12,900,000
13,134,000
26,034,000

TOTAL COMMON STOCKS (116.1%)

(COST $722,428,678)

1,029,535,164

BANKING (0.2%)

WARRANTS
225,000

WARRANT

JPMorgan Chase & Co. Expires 10/28/2018 (a) (COST $2,865,853)

1,912,500

SHORT-TERM SECURITIES AND OTHER ASSETS

52,634,324

SSgA U.S. Treasury Money Market Fund (a) (5.9%) (COST $52,634,324)

52,634,324

TOTAL INVESTMENTS (e) (122.2%)
Liabilities in excess of receivables and other assets (-0.8%)

(COST $777,928,855)

PREFERRED STOCK (-21.4%)
NET ASSETS APPLICABLE TO COMMON STOCK (100%)

1,084,081,988
(7,427,443)
1,076,654,545
(190,117,175)
$886,537,370

* 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 and fair value is $18.00 per

share, note 2. Fair value is based upon bid and 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 and fair value is $203.00 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 December 31, 2011: (1) the cost of investments for Federal income tax purposes was the same as the cost for financial reporting purposes,

(2) aggregate gross unrealized appreciation was $369,910,464, (3) aggregate gross unrealized depreciation was $63,757,331, and (4) net unrealized
appreciation was $306,153,133.

(see notes to financial statements)

1 0

S T A T E M E N T O F A S S E T S A N D L I A B I L I T I E S

G e n e r a l A m e r i c a n I n v e s t o r s

ASSETS

DECEMBER 31, 2011

INVESTMENTS, AT VALUE (NOTE 1a)

Common stocks (cost $722,428,678)
Warrant (cost $2,865,853)
Money market fund (cost $52,634,324)
Total investments (cost $777,928,855)

RECEIVABLES AND OTHER ASSETS

Dividends, interest and other receivables
Qualified pension plan asset, net excess funded (note 7)
Prepaid expenses and other assets

TOTAL ASSETS

LIABILITIES

Payables for securities purchased
Accrued preferred stock dividend not yet declared
Accrued supplemental pension plan liability (note 7)
Accrued supplemental thrift plan liability (note 7)
Accrued expenses and other liabilities

TOTAL LIABILITIES

5.95% CUMULATIVE PREFERRED STOCK, SERIES B -
7,604,687 at a liquidation value of $25 per share (note 5)
NET ASSETS APPLICABLE TO COMMON STOCK - 29,766,389 (note 5)

NET ASSET VALUE PER COMMON SHARE

NET ASSETS APPLICABLE TO COMMON STOCK
Common Stock, 29,766,389 shares at par value (note 5)
Additional paid-in capital (note 5)
Undistributed realized gain on securities sold
Undistributed net investment income (note 5)
Accumulated other comprehensive income (loss) (note 7)
Unallocated distributions on Preferred Stock
Unrealized appreciation on investments

NET ASSETS APPLICABLE TO COMMON STOCK

(see notes to financial statements)

$1,029,535,164
1,912,500
52,634,324
1,084,081,988

2,573,402
1,034,920
2,133,672

1,089,823,982

935,808
219,955
4,175,735
3,246,182
4,591,757
13,169,437

190,117,175
$886,537,370

$29.78

$29,766,389
556,383,685
853,165
1,286,147
(7,685,194)
( 219,955)
306,153,133

$886,537,370

1 1

S T A T E M E N T O F O P E R A T I O N S

G e n e r a l A m e r i c a n I n v e s t o r s

INCOME

Dividends (net of foreign withholding taxes of $563,770)
Interest

TOTAL INCOME

EXPENSES

Investment research
Administration and operations
Office space and general
Directors’ fees and expenses
Auditing and legal fees
Transfer agent, custodian and registrar fees and expenses
Stockholders’ meeting and reports
Miscellaneous taxes

TOTAL EXPENSES

NET INVESTMENT INCOME

YEAR ENDED

DECEMBER 31, 2011

$18,424,311
16,431

18,440,742

7,298,368
3,219,538
1,674,946
279,465
218,699
161,203
146,872
146,282

13,145,373

5,295,369

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 $288,080)
Written option transactions (notes 1b and 4)

Net decrease in unrealized appreciation

NET INVESTMENT INCOME AND (LOSS) ON INVESTMENTS

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

DECREASE IN NET ASSETS RESULTING FROM OPERATIONS

(see notes to financial statements)

19,202,122
305,525
19,507,647

(42,899,858)

(18,096,842)

(11,311,972)

($29,408,814)

1 2

S T A T E M E N T O F C H A N G E S I N N E T A S S E T S

G e n e r a l A m e r i c a n I n v e s t o r s

OPERATIONS

Net investment income
Net realized gain on investments
Net increase (decrease) in unrealized appreciation

Distributions to Preferred Stockholders:

From net investment income
From short-term capital gains
From long-term capital gains
Decrease in net assets from Preferred distributions

YEAR ENDED DECEMBER 31,

2011

2010

$5,295,369
19,507,647
(42,899,858)
(18,096,842)

$5,626,730
19,636,107
109,245,534
134,508,371

(3,326,632)
(249,312)
(7,736,028)
(11,311,972)

(2,112,684)
(878,926)
(8,320,362)
(11,311,972)

INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
OTHER COMPREHENSIVE INCOME

(29,408,814)

123,196,399

Funded status of defined benefit plans (note 7)

(2,864,213)

44,177

DISTRIBUTIONS TO COMMON STOCKHOLDERS

From net investment income
From short-term capital gains
From long-term capital gains

(4,388,308)
(328,878)
(10,204,952)

(2,427,967)
(1,010,091)
(9,562,040)

DECREASE IN NET ASSETS FROM COMMON DISTRIBUTIONS

(14,922,138)

(13,000,098)

CAPITAL SHARE TRANSACTIONS (NOTE 5)

Value of Common Shares issued in payment of dividends
and distributions
Cost of Common Shares purchased

DECREASE IN NET ASSETS - CAPITAL TRANSACTIONS

NET INCREASE (DECREASE) IN NET ASSETS

NET ASSETS APPLICABLE TO COMMON STOCK

7,094,056
(24,302,457)

7,219,220
(30,842,134)

(17,208,401)

(23,622,914)

(64,403,566)

86,617,564

BEGINNING OF YEAR

950,940,936

864,323,372

END OF YEAR (including undistributed net investment

income of $1,286,147 and $3,721,504, respectively)

$886,537,370

$950,940,936

(see notes to financial statements)

1 3

F I N A N C I A L H I G H L I G H T S

G e n e r a l A m e r i c a n I n v e s t o r s

The table shows per
share operating per-
formance data, total
investment return, ratios
and supplemental data
for each year in the
five-year period ended
December 31, 2011.
This information has
been derived from
information contained
in the financial state-
ments and market price
data for the Company’s
shares.

PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year

Net investment income
Net gain (loss) on securities - realized
and unrealized
Other comprehensive income

Distributions on Preferred Stock:
Dividends from net investment income
Distributions from net short-term
capital gains
Distributions from net long-term
capital gains
Distributions from return of capital

Total from investment operations

Distributions on Common Stock:
Dividends from net investment income
Distributions from net short-term
capital gains
Distributions from net long-term
capital gains
Distributions from return of capital

2011

2010

2009

2008

2007

$31.26
.18

$27.50
.19

$21.09
.11

$38.10
.42

$40.54
.31

(.68)
(.10)
(.60)

4.37
—
4.56

6.94
.07
7.12

(16.15)
(.25)
(15.98)

(.11)

(.07)

(.11)

(.01)

(.03)

(.05)

—

(.26)
—
(.38)
(.98)

(.27)
—
(.37)
4.19

(.19)
(.01)
(.36)
6.76

(.27)
—
(.38)
(16.36)

(.15)

(.08)

(.10)

(.19)

(.01)

(.03)

(.05)

—

3.39
.02
3.72

(.02)

(.03)

(.36)
—
(.41)
3.31

(.33)

(.38)

(.34)
—
(.50)

(.32)
—
(.43)

(.19)
(.01)
(.35)

(.46)
—
(.65)

(5.04)
—
(5.75)

Net asset value, end of year
Per share market value, end of year

$29.78
$24.91

$31.26
$26.82

$27.50
$23.46

$21.09
$17.40

$38.10
$34.70

TOTAL INVESTMENT RETURN - Stockholder
Return, based on market price per share

RATIOS AND SUPPLEMENTAL DATA
Net assets applicable to Common Stock,

(5.29%)

16.24%

36.86%

(48.20%)

8.72%

end of year (000’s omitted)

$886,537

$950,941

$864,323

$674,598 $1,202,923

Ratio of expenses to average net assets

applicable to Common Stock

1.39%

1.54%

1.93%

0.87%

1.11%

Ratio of net income to average net assets

applicable to Common Stock

Portfolio turnover rate

0.56%
11.17%

0.66%
18.09%

0.46%
24.95%

1.31%
25.52%

0.78%
31.91%

PREFERRED STOCK

Liquidation value, end of year

(000’s omitted)

Asset coverage
Liquidation preference per share
Market value per share

(see notes to financial statements)

$190,117
566%

$190,117
600%

$190,117
555%

$199,617 $200,000
701%

438%

$25.00
$25.47

$25.00
$24.95

$25.00
$24.53

$25.00
$21.90

$25.00
$21.99

1 4

N O T E S T O F I N A N C I A L S T A T E M E N T S

G e n e r a l A m e r i c a n I n v e s t o r s

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, diversified management investment company. It is internally managed by its offi-
cers under the direction of the Board of Directors.

The preparation of financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the amounts reported in the financial state-
ments 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 inde-
pendent dealers and information with respect to transactions in such securities to determine current market value. If,
after the close of foreign markets, conditions change significantly, the price of certain foreign securities may be adjusted
to reflect 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 procedures established by and under the general supervision
of the Board of Directors.
b. OPTIONS The Company may purchase and write (sell) put and call options. The Company typically purchases put
options or writes call options to hedge the value of portfolio investments while it typically purchases call options and
writes put options to obtain equity market exposure under specified circumstances. The risk associated with purchas-
ing 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 con-
tract. 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 transac-
tion, 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 exer-
cised, 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 mar-
ket risk of an unfavorable change in the price of the security underlying the written option. See Note 4 for written option
activity.
c. SECURITIES TRANSACTIONS AND INVESTMENT INCOME Securities 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 amorti-
zation of discount and premium on investments, is earned from settlement date and is recognized on the accrual basis.
Cost of short-term investments represents amortized cost.
d. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Portfolio securities and other assets and liabilities denominated in
foreign 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 availabil-
ity 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 mar-
ket 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 unre-
alized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and
liabilities other than investments in securities held at the end of the reporting period.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with
those of U.S. companies as a result of, among other factors, the possibility of political or economic instability or the level
of governmental supervision and regulation of foreign securities markets.

e. DIVIDENDS AND DISTRIBUTIONS The Company expects to pay dividends of net investment income and distributions of
net realized capital and currency gains, if any, annually to common shareholders and quarterly to preferred shareholders.
Dividends and distributions to common and preferred shareholders, which are determined in accordance with Federal in-
come 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 reclassified to paid-in capital as they arise.

f. FEDERAL INCOME TAXES The Company’s policy is to fulfill 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, management 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.

1 5

N O T E S T O F I N A N C I A L S T A T E M E N T S - c o n t i n u e d

G e n e r a l A m e r i c a n I n v e s t o r s

1. SIGNIFICANT ACCOUNTING POLICIES - (Continued from previous page.)
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
indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has
not had prior claims or losses pursuant to these indemnification 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 significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.),
and

Level 3 - significant unobservable inputs (including the Company’s own assumptions in determining the fair value of in-
vestments).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with invest-
ing in those securities. The following is a summary of the inputs used to value the Company’s net assets as of December
31, 2011:

Assets

Common stocks
Warrant
Money market fund

Total

Level 1

$1,009,674,664
1,912,500
52,634,324

$1,064,221,488

Level 2

—
—
—

—

Level 3

$19,860,500

—
—

$19,860,500

Total

$1,029,535,164
1,912,500
52,634,324

$1,084,081,988

The aggregate value of Level 3 portfolio investments changed during the year ended December 31, 2011 as follows:

Change in portfolio valuations using significant unobservable inputs

F a i r value at December 31, 2010
Purchases
Net change in unrealized appreciation on investments
F a i r value at December 31, 2011

Level 3

$17,550,000
3,248,000
(937,500)
$19,860,500

The amount of net unrealized loss included in the results of operations attributable
to Level 3 assets held at December 31, 2011 and reported within the caption
Net decrease in unrealized appreciation in the Statement of Operations:

($937,500)

3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (other than short-term securities and options) during 2011 amounted to $124,125,286
and $182,642,803, on long transactions, respectively.

4. WRITTEN OPTIONS
Transactions in collateralized put options during the year ended December 31, 2011 were as follows:

Options outstanding, December 31, 2010
Options written
Options expired
Options exercised
Options outstanding, December 31, 2011

Contracts
0
609
(400)
(209)
0

Premiums
$0
566,800
(403,209)
(163,591)

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, 29,766,389 shares were issued
and outstanding; 8, 000, 000 Preferred Shares were originally issued and 7, 604, 687 were outstanding on December 31, 2011.
On September 24, 2003, the Company issued and sold 8, 000, 000 shares of its 5.95% Cumulative Preferred Stock, Series
B in an underwritten offering. The Preferred Shares were noncallable for the 5 year period ended September 24, 2008 and
have a liquidation preference of $25.00 per share plus accumulated and unpaid dividends to the date of redemption. On
December 10, 2008, the Board of Directors authorized the repurchase of up to 1 million Preferred Shares in the open mar-
ket at prices below $25.00 per share.
The Company is required to allocate distributions from long-term capital gains and other types of income propor-
tionately among holders 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 capi-
tal gains or will represent a return of capital.

1 6

N O T E S T O F I N A N C I A L S T A T E M E N T S - c o n t i n u e d

G e n e r a l A m e r i c a n I n v e s t o r s

5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS - (Continued from previous page.)
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 main-
tain a certain discounted asset coverage for its portfolio that equals or exceeds a Basic Maintenance Amount. The Company has met
these requirements 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, gen-
erally, 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 subclas-
sification as a closed-end investment company or changes in its fundamental investment policies.
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 2011 and 2010 were as follows:

AMOUNT

2011

2010

2011

2010

Shares issued in payment of dividends and
distributions (includes 278,416 and
277,555 shares issued from treasury,
respectively)
Increase in paid-in capital
Total increase
Shares purchased (at an average
discount from net asset value of
14.6% and 14.6%, respectively)
Decrease in paid-in capital

Total decrease

Net decrease

278,416

277,555

$278,416
6,815,640
7,094,056

$277,555
6,941,665
7,219,220

935,321

1,279,476

(935,321)
(23,367,136)
(24,302,457)
($17,208,401)

(1,279,476)
(29,562,658)
(30,842,134)
($23,622,914)

At December 31, 2011, the Company held in its treasury 2,214,483 shares of Common Stock with an aggregate cost in the amount
of $55,137,135.
Distributions for tax and book purposes are substantially the same. As of December 31, 2011, distributable earnings on a tax basis
included $853,165 from undistributed net long-term capital gains and $306,153,133 from net unrealized appreciation on invest-
ments if realized in future years. Reclassifications arising from permanent “book/tax” differences reflect non-tax deductible expenses
incurred during the year ended December 31, 2011. As a result, undistributed net investment income was decreased by $15,786 and
additional paid-in capital was increased by $15,786. Net assets were not affected by this reclassification.

6. OFFICERS’ COMPENSATION - The aggregate compensation accrued and paid by the Company during the year ended December
31, 2011 to its officers (identified on page 20) amounted to $6, 192,500.

7. BENEFIT PLANS
The Company has funded (Qualified) and unfunded (Supplemental) defined contribution thrift plans that are available to its employ-
ees. The aggregate cost of such plans for 2011 was $520,723. The qualified thrift plan acquired 31,015 shares and sold 3,306 shares of
the Company’s Common Stock during the year ended December 31, 2011 and held 579,844 shares of the Company’s Common Stock at
December 31, 2011. The Company also has both funded (Qualified) and unfunded (Supplemental) noncontributory defined benefit pen-
sion plans that cover its employees. The pension plan provides a defined benefit based on years of service and final average salary with an
offset for a portion of Social Security covered compensation.
The Company recognizes the overfunded or underfunded status of a defined benefit 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.

1 7

N O T E S T O F I N A N C I A L S T A T E M E N T S - c o n t i n u e d

G e n e r a l A m e r i c a n I n v e s t o r s

7. BENEFIT PLANS - (Continued from previous page.)
OBLIGATIONS AND FUNDED STATUS OF DEFINED BENEFIT PLANS:

DECEMBER 31, 2011 (MEASUREMENT DATE)

QUALIFIED SUPPLEMENTAL

PLAN

TOTAL

CHANGE IN BENEFIT OBLIGATION:

Benefit obligation at beginning of year
Service cost
Interest cost
Benefits paid
Actuarial (gains)/losses
Plan amendments
Projected benefit obligation at end of year

CHANGE IN PLAN ASSETS:

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets at end of year

FUNDED STATUS AT END OF YEAR

$11,643,397
308,442
591,227
(608,666)
1,192,445
—
13,126,845

15,533,745
(763,314)
—
(608,666)
14,161,765
$1,034,920

$3,757,450
115,721
189,188
(188,040)
296,455
4,961
4,175,735

—
—
188,040
(188,040)
—
($4,175,735)

$15,400,847
424,163
780,415
(796,706)
1,488,900
4,961
17,302,580

15,533,745
(763,314)
188,040
(796,706)
14,161,765
($3,140,815)

Accumulated benefit obligation at end of year

$11,958,306

$3,718,102

$15,676,408

CHANGE IN FUNDED STATUS:
Noncurrent benefit asset

LIABILITIES
Current benefit liability
Noncurrent benefit liability

BEFORE
$3,890,348

ADJUSTMENTS
($2,855,428)

AFTER
$1,034,920

(219,784)
(3,537,666)

(29,876)
(388,409)

(249,660)
( 3,926,075)

ACCUMULATED OTHER COMPREHENSIVE INCOME

4,820,981

2,864,213

7,685,194

AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME CONSIST OF:
Net actuarial gain
Prior service cost

$4,578,987
241,994
$4,820,981

$2,905,847
(41,634)
$2,864,213

$7,484,834
200,360
$7,685,194

WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31, 2011 AND FOR DETERMINING

NET PERIODIC BENEFIT COST FOR THE YEAR ENDED DECEMBER 31, 2011:
Discount rate

Expected return on plan assets
Salary scale assumption

COMPONENTS OF NET PERIODIC BENEFIT COST:

Service cost
Interest cost
Expected return on plan assets
Amortization of:
Prior service cost
Recognized net actuarial loss

Net periodic benefit cost

5.00%
7.50%
4.25%

5.00%
N/A
4.25%

$308,442
591,227
(1,100,722)

45,837
447,090
$291,874

$115,721
189,188
—

758
—
$305,667

$424,163
780,415
(1,100,722)

46,595
447,090
$597,541

PLAN ASSETS
The Company’s qualified pension plan asset allocation by asset class at December 31, 2011, is as follows:
ASSET CATEGORY
Equity securities
Debt securities
Money market fund
Total

LEVEL 1
$11,081,056
525,661
419,879
$12,026,596

LEVEL 2
$2,106,449
—
—
$2,106,449

EXPECTED CASH FLOWS

QUALIFIED PLAN

SUPPLEMENTAL PLAN

Expected Company contributions for 2012
Expected benefit payments:
2012
2013
2014
2015
2016
2017-2021

—

$680,359
705,385
729,907
764,612
777,217
3,970,016

$249,660

$249,660
267,219
260,476
260,116
259,066
1,195,969

LEVEL 3
—
—
—
—

TOTAL
$13,187,505
525,661
419,879
$14,133,045

TOTAL

$249,660

$930,019
972,603
990,384
1,024,728
1,036,283
5,165,985

1 8

N O T E S T O F I N A N C I A L S T A T E M E N T S - c o n t i n u e d

G e n e r a l A m e r i c a n I n v e s t o r s

8. OPERATING LEASE COMMITMENT
In September 2007, the Company entered into an operating lease agreement for office space which expires in February 2018 and
provides for future rental payments in the aggregate amount of approximately $10, 755, 000, net of construction credits. The lease
agreement contains clauses whereby the Company receives free rent for a specified number of months and credit towards construction
of office 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 $1, 104,200 for the year ended December 31, 2011. Minimum rental commitments under the operating lease are
approximately $1, 075, 000 per annum in 2012, $1, 183, 000 in 2013 through 2017, and $99, 000 in 2018.

1 9

R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M

G e n e r a l A m e r i c a n I n v e s t o r s

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
GENERAL AMERICAN INVESTORS COMPANY, INC.

We have audited the accompanying statement
of assets and liabilities, including the statement
of investments, of General American Investors
Company, Inc. as of December 31, 2011, and the
related statement of operations for the year then
ended, the statement of changes in net assets for
each of the two years in the period then ended,
and financial highlights for each of the five years
in the period then ended. These financial state-
ments and financial highlights are the respon-
sibility of the Company’s management. Our
responsibility is to express an opinion on these
financial state ments and financial highlights
based on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting
Oversight Board (United States). Those standards
require that we plan and perform the audit to
obtain reasonable assurance about whether the
financial statements and financial highlights
are free of material misstatement. We were not
engaged to perform an audit of the Company’s
internal control over financial reporting. Our
audits included consideration of internal control
over financial reporting as a basis for design-
ing audit procedures that are appropriate in
the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of

the Company’s internal control over financial
reporting. Accordingly, we express no such
opinion. An audit includes examining, on a
test basis, evi dence supporting the amounts
and disclosures in the financial statements. Our
procedures included confirmation of securities
owned as of December 31, 2011, by correspon-
dence with the custodian and brokers. An audit
also includes assessing the accounting principles
used and significant estimates made by manage-
ment, as well as evaluating the overall financial
statement presentation. We believe that our
audits provide a reasonable basis for our opin-
ion.

In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial posi-
tion of General American Investors Company,
Inc. at December 31, 2011, the results of its oper-
ations for the year then ended, the changes in its
net assets for each of the two years in the period
then ended, and the financial highlights for each
of the five years in the period then ended, in con-
formity with U.S. generally accepted accounting
principles.

New York, New York
February 3, 2012

2 0

O F F I C E R S

G e n e r a l A m e r i c a n I n v e s t o r s

NAME (AGE)
EMPLOYEE SINCE

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

NAME (AGE)
EMPLOYEE SINCE

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

Spencer Davidson (69)
1994

Jeffrey W. Priest (49)
2010

Andrew V. Vindigni (52)
1988

Eugene S. Stark (53)
2005

Jesse Stuart (45)
2003

Chairman of the Board
since 2007, Chief Executive
Officer of the Company
since 1995

President of the Company
effective February 1, 2012
Managing Member and
President, Amajac Capital
Management, LLC
(1999-2010)

Senior Vice-President of the
Company since 2006
Vice-President 1995-2006
securities analyst (financial
services and consumer
non-durables industries)

Vice-President, Administration
of the Company and
Principal Financial Officer
since 2005, Chief Compliance
Officer since 2006

Vice-President of the
Company since 2006
securities analyst (general
industries)

Sally A. Lynch, Ph.D. (52) Vice-President of the
1997

Company since 2006
securities analyst
(biotechnology industry)

Michael W. Robinson (39) Vice-President of the
2006

Company since 2010
securities anlayst (general
industries)

Diane G. Radosti (59)
1980

Treasurer of the
Company since 1990
Principal Accounting
Officer since 2003

Carole Anne Clementi (65) Secretary of the
1982

Company since 1994
shareholder relations
and office management

Craig A. Grassi (43)
1991

Maureen E. LoBello (61)
1992

Assistant Vice-President of
the Company since 2005
information technology

Assistant Secretary of the
the Company since 2005
benefits administration

All officers serve for a term of one year and are elected by the Board of Directors at the time of its annual organization
meeting on the second Wednesday in April. The address for each officer is the Company’s office. Other directorships
and affiliations for Mr. Davidson are shown in the listing of Directors on the inside back cover of this report.

S E R V I C E O R G A N I Z A T I O N S

COUNSEL
Sullivan & Cromwell LLP

INDEPENDENT AUDITORS

Ernst & Young LLP

CUSTODIAN
State Street Bank and Trust
Company

TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company, LLC
59 Maiden Lane
New York, NY 10038
1-800-413-5499
www.amstock.com

Previous purchases of the Company’s Common and Preferred Stock are set forth in Note 5, on pages 15 and 16. Prospective pur-
chases of Common and Preferred Stock may be made 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 number (1-800-436-8401), (2) on the Company’s website at www.generalamericaninves-
tors.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 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 principal 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 re-
lated 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.

D I R E C T O R S
G e n e r a l A m e r i c a n I n v e s t o r s

NAME (AGE)
DIRECTOR SINCE

INDEPENDENT DIRECTORS
Arthur G. Altschul, Jr. (47)

1995

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

Co-Founder and Chairman
Kolltan Pharmaceuticals, Inc.

Managing Member
Diaz & Altschul Capital
Management, LLC
(private investment company)

Rodney B. Berens (66)
2007

Founding Partner
Berens Capital Management, LLC

Lewis B. Cullman (93)
1961

Philanthropist

Gerald M. Edelman (82)

1976

Member, Professor and Chairman of the
Department of Neurobiology
The Scripps Research Institute

John D. Gordan, III (66)
1986

Retired, Senior Counsel (2010-June 2011)
Partner (1994-2010)
Morgan, Lewis & Bockius LLP
(law firm)

Betsy F. Gotbaum (73)
2010

New York City’s Public Advocate
(2002-December 2009)

Sidney R. Knafel (81)
1994

Daniel M. Neidich (62)

2007

Lead Independent Director
Managing Partner
SRK Management Company
(private investment company)

Chief Executive Officer
Dune Real Estate Partners LP
(since December 2009)

Founding Partner and Co-Chief
Executive Officer
Dune Capital Management LP
(2005-December 2009)

OTHER DIRECTORSHIPS AND AFFILIATIONS

Child Mind Institute, Director
Delta Opportunity Fund, Ltd., Director
Medicis Pharmaceutical Corporation, Director
Neurosciences Research Foundation, Trustee
The Overbrook Foundation, Director

Alfred P. Sloan Foundation, Member of Investment Committee
Peterson Institute for International Economics, Member of Investment
Committee
Pierpont Morgan Library, Trustee and Head of Investment Committee
The Woods Hole Oceanographic Institute, Trustee and Member of
Investment Committee

Chess-in-the-Schools, Chairman Emeritus
Metropolitan Museum of Art, Honorary Trustee
Museum of Modern Art, Vice Chairman, International Council and
Honorary Trustee
Neurosciences Research Foundation, Vice Chairman, Board of Trustees
The New York Botanical Garden, Senior Vice Chairman, Board of Managers
The New York Public Library, Trustee

Neurosciences Institute of the Neurosciences Research Foundation
Director and President
NGN Capital, Chairman, Advisory Board
Promosome, LLC, Chairman, Scientific Advisory Board

Community Service Society, Trustee
Coro Leadership, Trustee
Fisher Center for Alzheimer’s Research Foundation, Trustee
Learning Leaders, Trustee
Medrium, Inc., Consultant
Visiting Nurse Association of New York, Trustee

IGENE Biotechnology, Inc., Director
Insight Communications Company, Inc., Chairman, Board of Directors
VirtualScopics, Inc., Director
Vocollect, Inc., Director (term expired 2011)

Capmark, Director (term expired 2011)
Child Mind Institute, Director
NY Child Study Center, Director (term expired 2009)
Prep for Prep, Director
Real Estate Roundtable, Chairman, Board of Directors
Urban Land Institute, Trustee

D. Ellen Shuman (56)

2004

Vice President and
Chief Investment Officer
Carnegie Corporation of New York
(1999-July 2011)

American Academy of Arts and Letters, Investment Advisor
Bowdoin College, Trustee
Community Foundation of Greater New Haven, Investment Advisor
Edna McConnell Clark Foundation, Trustee
The Investment Fund for Foundations, Trustee (term expired 2008)

Raymond S. Troubh (85)
1989

Financial Consultant

INTERESTED DIRECTOR
Spencer Davidson (69)
1995

Chairman of the Board
and Chief Executive Officer
General American Investors
Company, Inc.

Diamond Offshore Drilling, Inc., Director
Gentiva Health Services, Inc., Director
Sun Times Media Group, Director (term expired 2007)
The Wendy’s Company, Director

Medicis Pharmaceutical Corporation, Director
Neurosciences Research Foundation, Trustee

All Directors serve for a term of one year and are elected by Stockholders at the time of the annual meeting on the second Wednesday in April. The address
for each Director is the Company’s office.