General American Investors Company, Inc. Annual Report 2013

FY2013 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 3
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 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.

2013

2012

$1,229,469,746
5,228,019
69,657,472
243,076,683
(11,311,972)

$41.07
$35.20
-14.3%

$955,417,661
6,973,024
60,458,284
84,267,705
(11,311,972)

$32.68
$27.82
-14.9%

29,939,568
$36.04-$28.55
6,984,029

29,233,972
$29.62-$25.37
9,079,151

DIVIDEND SUMMARY (per share) (unaudited)

Record Date

Payment Date

Ordinary
Income

Long-Term
Capital Gain

Total

Common Stock

Nov. 18, 2013
Total from 2013 earnings

Dec. 30, 2013

$0.184190

$1.915810

$2.100000

Nov. 19, 2012
Dec. 24, 2012
Total from 2012 earnings
(a) Includes short-term gains in the amount of $.011198 per share.
(b) Includes short-term gains in the amount of $.003932 per share.

Dec. 28, 2012
Jan. 31, 2013

$0.170000 (a)
0.059686 (b)

$0.229686

$1.230000
0.540314
$1.770314

$1.400000
0.600000
$2.000000

Preferred Stock

Mar. 7, 2013
Jun. 7, 2013
Sept. 9, 2013
Dec. 9, 2013
Total for 2013

Mar. 7, 2012
Jun. 7, 2012
Sept. 7, 2012
Dec. 7, 2012
Total for 2012

Mar. 25, 2013
Jun. 24, 2013
Sept. 24, 2013
Dec. 24, 2013

Mar. 26, 2012
Jun. 25, 2012
Sept. 24, 2012
Dec. 24, 2012

$.032617
.032617
.032617
.032617
$.130468

$.042434
.042434
.042434
.042434
$.169736 (c)

$.339258
.339258
.339258
.339258
$1.357032

$.329441
.329441
.329441
.329441
$1.317764

$.371875
.371875
.371875
.371875
$1.487500

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

Looking ahead, and notwithstanding current uncer-
tainty regarding a number of fiscal policy issues and the
withdrawal of QE among others, economic trends have
improved modestly. Recent data regarding employ-
ment and orders, as well as significant corporate cash
balances and authorized but unexecuted share repur-
chases of more than $300 billion, suggests that cautious
optimism may be warranted for the longer term.

As part of an ongoing effort to maximize shareholder
value, over 1% of the Company’s shares were repur-
chased in 2013 at an average discount to NAV of 14.3%.
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 2013, 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.

The Company is pleased to report that on January 1,
2014, Linda J. Genid, an employee of the Company since
1983, was appointed Assistant Corporate Secretary.

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,

Jeffrey W. Priest
President and Chief Executive Officer

January 22, 2014

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) increased 33.3% for the year ended

December 31, 2013. The U.S. stock market was up
32.4% for the year, as measured by our benchmark, the
Standard & Poor’s 500 Stock Index (including income).
The return to our Common Stockholders increased by
34.2% and the discount at which our shares traded to
their NAV continued to fluctuate and on December 31,
2013, it was 14.3%.

The table that follows provides a comprehensive presen-
tation of our performance and compares our returns on
an annualized basis with the S&P 500.

Years

Stockholder Return
(Market Value)

NAV Return

S&P 500

15.1%

15.0%

19.4

7.4

11.1

11.9

13.5

11.9

18.3

7.4

11.1

12.4

13.2

12.4

16.2%

17.9

7.4

9.2

11.1

11.0

9.9

2013 was an extraordinary year for equities with the
S&P 500 registering its biggest advance since 1997.
Everywhere in the developed world, sizable returns
were realized despite continuing muted economic
growth. This performance was even more remarkable
in light of earnings growth that came in well below
initial expectations. With respect to the S&P 500,
earnings were supplemented by share repurchases,
which totaled over 2% of GDP. Although net income
did improve, roughly 60% of the market’s gain re-
flected expansion in its price to earnings multiple.
Extraordinarily for US equities, no sector registered a
negative return and substantial gains were recorded
in information technology, healthcare and industri-
als. Not even a mid-year jump in yields for ten year US
Treasury Notes affected equity markets for long, with
rates rising from a depressed 1.5% to nearly 3%.

While the economy and the financial markets rarely
follow the same road, they intersect often. Over the
past year or so, the two diverged with the markets
doing well, while the general economy remained
lethargic. In 2014, these two roads may converge
once again. How that happens is the subject of much
debate, but it seems that the financial markets are ex-
pecting a general improvement in economic conditions
to offset a gentle withdrawal of Federal Reserve support
in the form of Quantitative Easing (QE).

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 organiza-

tion that is internally managed. For regula-
tory 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 continu-
ous investment research program, which
stresses fundamental security analysis, 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. Jeffrey W. Priest, has
been President of the
Company since February 1,
2012 and has been respon-
sible for the management of
the Company since January

1, 2013 when he was appointed Chief
Executive Officer and Portfolio Manager.
Mr. Priest joined the Company in 2010 as a
senior investment analyst and has spent his
entire 28-year business career on Wall Street.
Mr. Priest succeeds Mr. Spencer Davidson
who served as Chief Executive Officer and
Portfolio Manager from 1995 through 2012.
Mr. Davidson remains closely involved in
the Company as its Chairman of the Board
of Directors. Common Stock

“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 pub-
lished 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 investment
companies, they occasionally sell at a pre-
mium over NAV. During 2013, the stock sold
at discounts to NAV which ranged from 12.1%
(April 4) to 15.4% (August 13). At December
31, the price of the stock was at a discount of
14.3%.

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 in
the aggregate). The Preferred Shares are rated
“A1” 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
performance of the Common Stockholders;
higher market volatility for the Common
Stockholders may result.

The Board of Directors has authorized the re-
purchase of up to 1 million Preferred Shares
in the open market at prices below $25 per
share. To date, 395,313 shares have been re-
purchased.

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

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. If any additional capi-
tal 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
1943-2013 (except for the year 1974). (A table
listing dividends and distributions paid during
the 20-year period 1994-2013 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 securities
and the Company’s proxy
voting record for the 12-
month period ended June
30, 2013 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.generalamerican-
investors.com and (3) on the Securities and
Exchange Commission’s website at www.sec.
gov.

Direct
Registration

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

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 identification 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 securities 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, 2013

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

over the 20 years ended December 31, 2013 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 1994.

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.

The graph and tables below do not reflect the deduction of taxes that a stockholder would pay on
Company distributions or the sale of Company shares.

GENERAL AMERICAN INVESTORS

STANDARD & POOR’S 500

STOCKHOLDER RETURN

NET ASSET VALUE RETURN

RETURN

CUMULATIVE
INVESTMENT

$9,214

11,169

13,345

19,027

24,985

34,784

41,427

43,221

31,461

39,958

43,471

51,034

59,598

64,795

33,564

45,935

53,395

50,571

60,569

81,307

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

ANNUAL
RETURN

-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

19.77

34.24

CUMULATIVE
INVESTMENT

ANNUAL
RETURN

CUMULATIVE
INVESTMENT

ANNUAL
RETURN

$9,726

12,019

14,420

19,041

25,732

35,099

41,290

40,795

31,404

40,008

44,157

51,311

57,591

62,204

35,444

46,814

53,982

52,432

61,508

82,009

-2.74%

$10,127

1.27%

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

17.31

33.33

13,925

17,115

22,819

29,334

35,482

32,257

28,422

22,129

28,449

31,519

33,041

38,215

40,283

25,349

32,054

36,881

37,666

43,689

57,849

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

15.99

32.41

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 4 - 2 0 1 3 ) ( U N A U D I T E D )

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.

EARNINGS SOURCE

SHORT-TERM

LONG-TERM RETURN OF

YEAR INCOME CAPITAL GAINS CAPITAL GAINS CAPITAL

EARNINGS SOURCE
SHORT-TERM

LONG-TERM RETURN OF

YEAR INCOME CAPITAL GAINS CAPITAL GAINS CAPITAL

1994 $.060
.100
1995
.200
1996
.210
1997
.470
1998
.420
1999
.480
2000
.370
2001
2002
.030
.020
2003

—
$.030
.050
—
—
.620
1.550
.640
—
—

—
$1.590
—
2.770
—
2.710
—
2.950
—
4.400
—
4.050
6.160
—
1.370 —
—
—

.330
.590

2004 $.217
.547
2005
.334
2006
.706
2007
.186
2008
.103
2009
.081
2010
.147
2011
.215
2012
.184
2013

—
$.041
—
.009
—
.051
.033
.011
.015
—

$.957
1.398
2.666
5.250
.254
.186
.316
.342
1.770
1.916

—
—
—
—
—
$.010
—
—
—
—

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, 2013

STOCKHOLDER
RETURN

GAM NET
ASSET VALUE

S&P 500
STOCK INDEX

1 year

34.2%

33.3%

32.4%

5 years

19.4

18.3

17.9

10 years

15 years

7.4

8.2

7.4

8.0

20 years

11.1

7.4

4.6

9.2

$100000

$75000

$50000

$25000

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 3 ( 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

NET SHARES TRANSACTED

SHARES HELD

NEW POSITIONS

Cameco Corporation
The Dow Chemical Company
Intel Corporation

ADDITIONS

Ariad Pharmaceuticals, Inc.
Bond Street Holdings LLC, Class A
General Electric Company

Merck & Co., Inc.
Unilever N.V.

DECREASES

ELIMINATION

Canadian Natural Resources Limited

REDUCTIONS

The ADT Corporation
American Express Company
Arch Capital Group Ltd.
Everest Re Group, Ltd.
JPMorgan Chase & Co.
Nelnet, Inc.
Platinum Underwriters Holdings, Ltd.
The TJX Companies, Inc.
Towers Watson & Co. Class A
Visteon Corporation
Vodafone Group plc ADR
Weatherford International Ltd.

100,000
—
573,700

760,000
120,000
75,000
102,191
5,775

196,600

195,000
10,000
25,000
10,000
25,000
15,000
20,000
75,000
18,200
55,000
285,000
268,654

746,038 (b)
378,200 (b)
573,700

1,200,000
795,000
725,000
427,191
734,620

—

117,500
265,000
800,000
230,000
425,000
525,000
335,000
1,344,668
245,798
275,211
238,100
1,456,346

(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

COST(000)

VALUE(000)

PERCENT COMMON NET ASSETS*

DECEMBER 31, 2013

The diversification of the
Company’s net assets
applicable to its Common
Stock by industry group as
of December 31, 2013 is
shown in the table.

INDUSTRY CATEGORY
Financials
Banks
Diversified Financials
Insurance

Information Technology
Semiconductors & Semiconductor Equipment
Software & Services
Technology Hardware & Equipment

Consumer Discretionary
Automobiles & Components
Consumer Services
Retailing

Consumer Staples
Food, Beverage & Tobacco
Food & Staples Retailing

Energy

Industrials
Capital Goods
Commercial & Professional Services

$15,988
30,484
72,232
118,704

18,200
17,330
73,801
109,331

31,335
8,679
43,206
83,220

60,773
12,042
72,815

97,176

48,645
36,148
84,793

Health Care
Pharmaceuticals, Biotechnology & Life Sciences 59,493
45,583
Miscellaneous**
11,908
Materials
6,090
Telecommunication Services
689,113
100,019
$789,132

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

* 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)

$24,933
71,021
219,028
314,982

41,768
25,478
123,423
190,669

42,041
13,620
130,920
186,581

116,361
46,953
163,314

142,202

69,121
72,213
141,334

107,792
49,585
16,792
9,360
1,322,611
100,019
1,422,630
(3,043)
(190,117)
$1,229,470

2.0%
5.8
17.8
25.6

3.4
2.1
10.0
15.5

3.4
1.1
10.7
15.2

9.5
3.8
13.3

11.6

5.6
5.9
11.5

8.8
4.0
1.4
0.7
107.6
8.1
115.7
(0.2)
(15.5)
100.0%

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, 2013,
shown on pages 8 and 9
includes 58 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 has benefited greatly from the global adoption of
mobile data applications.

ARCH CAPITAL GROUP LTD.
Arch Capital, a Bermuda-based insurer/reinsurer, generates premiums
of approximately $3.5 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.

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 in the U.S. and overseas.

APPLE INC.
Apple designs, manufactures and markets mobile communications
and media devices, personal computers and portable digital music
players. It also sells device related software, services, peripherals and
third-party content, including applications. The company’s growth pro-
spects look favorable as the shift to mobile computing expands globally
and as more products and services are added to the Apple ecosystem.

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 enables Republic Services to generate significant free cash flow.

VALUE

% COMMON
NET ASSETS*

1,344,668

$85,695,692

7.0%

700,000

51,975,000

4.2

800,000

47,752,000

3.9

394,500

46,953,390

3.8

67,000

37,588,340

3.1

1,087,100

36,091,720

2.9

EVEREST RE GROUP, LTD.
Everest Re is one of the largest independent U.S. property/casualty
reinsurers, generates annual premiums of approximately $4.5 billion,
has a high quality investment portfolio and a well-reserved A-rated
balance sheet. This Bermuda domiciled company has a strong manage-
ment team that exercises prudent underwriting discipline and efficient
expense control, resulting in above-average earnings and book value growth.

HALLIBURTON COMPANY
Halliburton offers a broad suite of services and products to customers
worldwide for the exploration, development and production of oil
and gas. The company has the scale, product depth and technology
to provide value-added customer service and produce an attractive
long-term return on invested capital.

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,
it 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.

UNITED TECHNOLOGIES CORPORATION
United Technologies provides products and services to the global
aerospace and building industries. The company holds a leading
position in many of the markets it serves which augments its
ability to generate favorable long-term shareholder return via growth,
dividends and share repurchases.

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

230,000

35,850,100

2.9

685,000

34,763,750

2.8

262,400

34,747,008

2.8

300,000

34,140,000

2.8

$445,557,000

36.2%

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 3

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

CONSUMER
DISCRETIONARY
(15.2%)

COMMON STOCKS

AUTOMOBILES AND COMPONENTS (3.4%)
1,264,063 Ford Motor Company

275,211 Visteon Corporation (a)

CONSUMER SERVICES (1.1%)

VALUE (NOTE 1a)

$19,504,492
22,537,029
42,041,521

(COST $31,334,689)

750,000 International Game Technology

(COST $8,678,620)

13,620,000

RETAILING (10.7%)

284,050 Kohl’s Corporation
460,000 Target Corporation

1,344,668 The TJX Companies, Inc.

CONSUMER STAPLES
(13.3%)

FOOD, BEVERAGE AND TOBACCO (9.5%)

262,400 Diageo plc ADR
450,000 Nestle S.A.
230,000 PepsiCo, Inc.
734,620 Unilever N.V.

ENERGY
(11.6%)

FOOD AND STAPLES RETAILING (3.8%)

394,500 Costco Wholesale Corporation

1,683,269 Alpha Natural Resources, Inc. (a)

331,478 Apache Corporation
746,038 Cameco Corporation
685,000 Halliburton Company
120,000 Occidental Petroleum Corporation
803,803 Ultra Petroleum Corp. (a)

1,456,346 Weatherford International Ltd. (a)

FINANCIALS
(25.6%)

BANKS (2.0%)

795,000 Bond Street Holdings LLC, Class A (a) (b)
75,000 Bond Street Holdings LLC, Class B (a) (c)

110,000 M&T Bank Corporation

DIVERSIFIED FINANCIALS (5.8%)

265,000 American Express Company
425,000 JPMorgan Chase & Co.
525,000 Nelnet, Inc.

INSURANCE (17.8%)

(COST $43,206,265)
(COST $83,219,574)

(COST $60,773,115)

(COST $12,041,935)
(COST $72,815,050)

(COST $96,794,116)

(COST $15,988,426)

(COST $30,483,653)

330,492 Aon Corporation
800,000 Arch Capital Group Ltd. (a)

110 Berkshire Hathaway Inc. Class A (a)

230,000 Everest Re Group, Ltd.

53,500 Forethought Financial Group Inc. Class A (a) (d)

365,000 MetLife, Inc.
260,000 PartnerRe Ltd.
335,000 Platinum Underwriters Holdings, Ltd.

HEALTH CARE
(8.8%)

PHARMACEUTICALS, BIOTECHNOLOGY AND LIFE SCIENCES

1,200,000 Ariad Pharmaceuticals, Inc. (a)

100,000 Celgene Corporation (a)
131,535 Cytokinetics, Incorporated (a)
428,600 Gilead Sciences, Inc. (a)
858,979 Idenix Pharmaceuticals, Inc. (a)
427,191 Merck & Co., Inc.
755,808 Pfizer Inc.

(COST $72,231,690)
(COST $118,703,769)

(COST $59,492,394)

16,119,837
29,104,200
85,695,692
130,919,729
186,581,250

34,747,008
32,953,910
19,076,200
29,583,654
116,360,772

46,953,390
163,314,162

12,018,541
28,487,219
15,495,209
34,763,750
11,412,000
17,402,335
22,558,800
142,137,854

11,130,000
997,500
12,806,200
24,933,700

24,043,450
24,854,000
22,123,500
71,020,950

27,724,974
47,752,000
19,569,000
35,850,100
20,510,295
19,680,800
27,411,800
20,528,800
219,027,769
314,982,419

8,184,000
16,896,800
854,977
32,187,860
5,136,694
21,380,910
23,150,399
107,791,640

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 3 - 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

COMMON STOCKS (Continued)

VALUE (NOTE 1a)

INDUSTRIALS
(11.5%)

CAPITAL GOODS (5.6%)

725,000 General Electric Company
360,000 Owens Corning (a)
300,000 United Technologies Corporation

COMMERCIAL AND PROFESSIONAL SERVICES (5.9%)

117,500 The ADT Corporation
1,087,100 Republic Services, Inc.

245,798 Towers Watson & Co. Class A

INFORMATION
TECHNOLOGY
(15.5%)

SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT (3.4%)

286,850 ASML Holding N.V.
573,700

Intel Corporation

SOFTWARE AND SERVICES (2.1%)

680,686 Microsoft Corporation

TECHNOLOGY HARDWARE AND EQUIPMENT (10.0%)

67,000 Apple Inc.

820,000 Cisco Systems, Inc.
615,000 EMC Corporation
700,000 QUALCOMM Incorporated

(COST $48,644,655)

(COST $36,148,567)
(COST $84,793,222)

(COST $18,200,521)

$20,321,750
14,659,200
34,140,000
69,120,950

4,755,225
36,091,720
31,366,283
72,213,228
141,334,178

26,877,845
14,890,383
41,768,228

(COST $17,329,639)

25,478,077

37,588,340
18,392,600
15,467,250
51,975,000
123,423,190
190,669,495

(COST $73,800,999)
(COST $109,331,159)

MATERIALS
(1.4%)
MISCELLANEOUS
(4.0%)
TELECOMMUNICATION
SERVICES (0.7%)

378,200 The Dow Chemical Company

(COST $11,908,071)

16,792,080

Other (e)

(COST $45,583,278)

49,584,774

238,100 Vodafone Group plc ADR

(COST $6,090,345)

9,359,711

TOTAL COMMON STOCKS (107.6%)

(COST $688,730,978)

1,322,547,563

PUT OPTION
ENERGY
(0.0%)

CONTRACTS

(100 SHARES EACH) COMMON STOCK/EXPIRATION DATE/EXERCISE PRICE

4,000 Weatherford International Ltd./January 18, 2014/$15

SHORT-TERM SECURITIES AND OTHER ASSETS

100,018,779

SSgA U.S. Treasury Money Market Fund (a) (8.1%)

(COST $100,018,779)

100,018,779

(COST $382,142)

64,000

TOTAL INVESTMENTS (f) (115.7%)
Liabilities in excess of receivables and other assets (-0.2%)

(COST $789,131,899)

PREFERRED STOCK (-15.5%)
NET ASSETS APPLICABLE TO COMMON STOCK (100%)

1,422,630,342
(3,043,421)
1,419,586,921
(190,117,175)
$1,229,469,746

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 $14.00 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 .91% 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 $13.30 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 evalua-

tion of book value per share. Amount represents .08% of net assets.

(d) Level 3 fair value measurement, restricted security acquired in two installments as follows: 37,500 shares on 11/3/09, unit cost $200.00 per share and
16,000 shares on 8/4/11, unit cost $203.00 per share. Fair value is $383.37 per share, note 2. Fair valuation until September 2013 was based upon a
market approach using valu ation 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. Significant increases (de
creases) in the relative valuation metrics of the peer group companies may result in higher (lower) estimates of fair value. Thereafter fair valuation was
based upon a discount to the proposed acquisition price of the company by a third party. As of year end, valuation is based upon discounts applied to
the components comprising the total estimated acquisition price of the company. The initial closing took place on 1/3/14 and proceeds of $353.78 per
share were collected. The majority of the remaining proceeds are expected to be collected within one year with residual escrow balances paid within
approximately three years of the initial closing. Amount represents 1.67% of net assets.

(e) Securities which have been held for less than one year, not previously disclosed, and not restricted.
(f) At December 31, 2013, the cost of investments for Federal income tax purposes was $789,131,899; aggregate gross unrealized appreciation of

$637,902,284; aggregate gross unrealized depreciation of $4,403,841 and net unrealized appreciation of $633,498,443.

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

INVESTMENTS, AT VALUE (NOTE 1a)

Common stocks (cost $688,730,978)
Purchased Option (cost $382,142)
Money market fund (cost $100,018,779)
Total investments (cost $789,131,899)

RECEIVABLES AND OTHER ASSETS

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

TOTAL ASSETS

LIABILITIES

Accrued preferred stock dividend not yet declared
Outstanding option written, at value (premium received $229,628)
Accrued supplemental pension plan liability (note 7)
Accrued supplemental thrift plan liability (note 7)
Accrued compensation payable to officers and employees
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 - 29,939,568 (note 5)

NET ASSET VALUE PER COMMON SHARE

NET ASSETS APPLICABLE TO COMMON STOCK
Common Stock, 29,939,568 shares at par value (note 5)
Additional paid-in capital (note 5)
Undistributed realized gain on securities sold
Undistributed net investment loss (note 5)
Accumulated other comprehensive loss (note 7)
Unallocated distributions on Preferred Stock
Unrealized appreciation on investments and options written

NET ASSETS APPLICABLE TO COMMON STOCK

DECEMBER 31, 2013

$1,322,547,563
64,000
100,018,779
1,422,630,342

161,738
1,480,111
5,578,192
1,505,011

1,431,355,394

219,955
230,550
4,627,182
2,338,841
3,673,500
678,445
11,768,473

190,117,175
$1,229,469,746

$41.07

$29,939,568
564,558,132
3,710,263
(191,539)
(1,824,244)
(219,955)
633,497,521

$1,229,469,746

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

CONTRACTS

CALL OPTIONS

(100 SHARES EACH) COMMON STOCK/EXPIRATION DATE/EXERCISE PRICE VALUE (NOTE 1a)

CONSUMER DISCRETIONARY (0.0%)
AUTOMOBILES AND
COMPONENTS
ENERGY (0.0%)

250
950

(see notes to financial statements)

Visteon Corporation/February 22, 2014/$75
Weatherford International Ltd./February 22, 2014/$17

(PREMIUMS RECEIVED $229,628)

$212,500
18,050
$230,550

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 $542,797)

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
Miscellaneous taxes
Stockholders’ meeting and reports

TOTAL EXPENSES

NET INVESTMENT INCOME

YEAR ENDED

DECEMBER 31, 2013

$19,284,397

19,284,397

7,651,058
3,756,624
1,730,929
242,745
225,000
206,260
166,373
77,389

14,056,378

5,228,019

Realized Gain And Change In Unrealized Appreciation On Investments (Notes 1, 3 and 4)

Net realized gain on investments:
Securities transactions
Written options transactions (notes 1b and 4)

Net increase in unrealized appreciation

NET INVESTMENT INCOME, GAINS AND APPRECIATION ON INVESTMENTS

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

68,658,311
999,161
69,657,472

243,076,683

317,962,174

(11,311,972)

INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$306,650,202

(see notes to financial statements)

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 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

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

Funded status of defined benefit plans (note 7)

DISTRIBUTIONS TO COMMON STOCKHOLDERS

YEAR ENDED DECEMBER 31,

2013

2012

$5,228,019
69,657,472
243,076,683
317,962,174

$6,973,024
60,458,284
84,267,705
151,699,013

(992,168)
—
(10,319,804)
(11,311,972)

(1,205,766)
(85,020)
(10,021,186)
(11,311,972)

306,650,202

140,387,041

5,948,555

(87,605)

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

(5,382,759)
—
(55,987,513)

(6,109,048)
(430,801)
(50,405,654)

DECREASE IN NET ASSETS FROM COMMON DISTRIBUTIONS

(61,370,272)

(56,945,503)

CAPITAL SHARE TRANSACTIONS (NOTE 5)

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

35,871,304
(13,047,704)

21,554,674
(36,028,316)

INCREASE (DECREASE) IN NET ASSETS - CAPITAL TRANSACTIONS

22,823,600

(14,473,642)

NET INCREASE IN NET ASSETS

274,052,085

68,880,291

NET ASSETS APPLICABLE TO COMMON STOCK

BEGINNING OF YEAR

955,417,661

886,537,370

END OF YEAR (including undistributed net investment

income (loss) of ($191,539) and $947,161, respectively)

$1,229,469,746

$955,417,661

(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 performance
data, total investment
return, ratios and supple-
mental data for each year
in the five-year period
ended December 31, 2013.
This information has
been derived from infor-
mation contained in the
financial statements 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 (loss)

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:

2013

2012

2011

2010

2009

$32.68
.17

$29.78
.24

$31.26
.18

$27.50
.19

$21.09
.11

10.51
.20
10.88

5.05
—
5.29

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

4.37
—
4.56

6.94
.07
7.12

(.04)

(.11)

(.07)

(.11)

—

(.01)

(.03)

(.05)

(.35)
—
(.39)
10.49

(.34)
—
(.39)
4.90

(.26)
—
(.38)
(.98)

(.27)
—
(.37)
4.19

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

Dividends from net investment income

(.18)

(.21)

(.15)

(.08)

(.10)

Distributions from net short-term

capital gains
Distributions from net long-term
capital gains

Distributions from return of capital

—

(.02)

(.01)

(.03)

(1.92)
—
(2.10)

(1.77)
—
(2.00)

(.34)
—
(.50)

(.32)
—
(.43)

(.05)

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

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

$41.07
$35.20

$32.68
$27.82

$29.78
$24.91

$31.26
$26.82

$27.50
$23.46

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

RATIOS AND SUPPLEMENTAL DATA
Net assets applicable to Common Stock,

34.24%

19.77%

(5.29%)

16.24%

36.86%

end of year (000’s omitted)

$1,229,470

$955,418

$886,537

$950,941 $864,323

Ratio of expenses to average net assets

applicable to Common Stock

1.27%

1.67%

1.39%

1.54%

1.93%

Ratio of net income to average net assets

applicable to Common Stock

Portfolio turnover rate

0.47%
17.12%

0.74%
9.56%

0.56%
11.17%

0.66%
18.09%

0.46%
24.95%

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
747%

$190,117
603%

$190,117
566%

$190,117 $190,117
555%

600%

$25.00
$25.30

$25.00
$25.54

$25.00
$25.47

$25.00
$24.95

$25.00
$24.53

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 officers 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 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 official 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
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 spe-
cific 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 specified 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 pre-
mium 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. 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 amortization of dis-
count 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 valu-
ation. 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 ex-
change 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 sepa-
rately 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 governmen-
tal 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 real-
ized capital and currency gains, if any, annually to common shareholders and quarterly to preferred shareholders. Dividends
and distributions to common and preferred shareholders, which are determined in accordance with Federal income tax regula-
tions are recorded on the ex-dividend date. 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 regu-
lated 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 indem-
nifications. 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 am-
ortized 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,
2013:

Assets

Common stocks
Purchased Option
Money market fund

Total

Liabilities

Options Written

Level 1

$1,289,909,768
64,000
100,018,779

$1,389,992,547

($230,550)

Level 2

—
—
—

—

Level 3

$32,637,795

—
—

$32,637,795

Total

$1,322,547,563
64,000
100,018,779

$1,422,630,342

($230,550)

The aggregate value of Level 3 portfolio investments changed during the year ended December 31, 2013 as follows:

Change in portfolio valuations using significant unobservable inputs

Fai r value at December 31, 2012

Purchases

Net change in unrealized appreciation on investments

Fair value at December 31, 2013

Level 3

$21,218,125

5,428,250

5,991,420

$32,637,795

The increase in net unrealized appreciation included in the results of operations attributable
to Level 3 assets held at December 31, 2013 and reported within the caption
Net change in unrealized appreciation in the Statement of Operations:

$5,991,420

Transfers, if any, are reported as of the end of the reporting period. There were no transfers between Levels during the
year ended December 31, 2013.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (other than short-term securities and options) during 2013 amounted to $202,444,700 and
$241,495,826, 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 call
options and collateralized put options during the year ended December 31, 2013 were as follows:

Options outstanding, December 31, 2012
Options written
Options exercised
Options terminated in closing purchase transaction
Options outstanding, December 31, 2013

COVERED CALLS

CONTRACTS
3 00
4,250
0
(3,350)
1,200

PREMIUMS
$104,999
447,590
0
(322,961)
$229,628

COLLATERALIZED PUTS

CONTRACTS

0
6,153
(1,375)
(4,778)
0

PREMIUMS
$0
1,674,723
(451,255)
(1,223,468)
$0

5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS
The authorized capital stock of the Company consists of 50, 000, 000 shares of Common Stock, $1.00 par value, and
10, 000, 000 shares of Preferred Stock, $1.00 par value. With respect to the Common Stock, 29,939,568 shares were issued
and outstanding; 8, 000, 000 Preferred Shares were originally issued and 7, 604, 687 were outstanding on December 31, 2013.

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 allocates distributions from long-term capital gains and other types of income proportionately 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 capital gains or will repre-
sent 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 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 fore-
going 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 addi-
tion, the Investment Company Act of 1940 requires that approval of the holders of a majority of any outstanding Preferred Shares, vot-
ing 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 subclassification 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 2013 and 2012 were as follows:

AMOUNT

2013

2012

2013

2012

Shares issued in payment of dividends and
distributions (includes 1,090,772 and
766,116 shares issued from treasury,
respectively)
Increase in paid-in capital
Total increase
Shares purchased (at an average
discount from net asset value of
14.3% and 14.5%, respectively)
Decrease in paid-in capital

Total decrease
Net increase (decrease)

1,090,772

766,116

$1,090,772
34,780,532
35,871,304

$766,116
20,788,558
21,554,674

(385,176)

(1,298,533)

705,596

(532,417)

(385,176)
(12,662,528)
(13,047,704)
$22,823,600

(1,298,533)
(34,729,783)
(36,028,316)
($14,473,642)

At December 31, 2013, the Company held in its treasury 2,041,304 shares of Common Stock with an aggregate cost of $57,970,489.

The tax basis distribution during the year ended December 31, 2013 is 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 dur-
ing 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 year ended December 31, 2013 to its officers (identified on
page 20) amounted to $6,897,833 of which $3,370,000 was payable as of year end.

7. BENEFIT PLANS
The Company has funded (Qualified) and unfunded (Supplemental) defined contribution thrift plans that are available to its employees.
The aggregate cost of such plans for 2013 was $932,301. The qualified thrift plan acquired 54,684 shares, sold 28,800 shares and distrib-
uted 25,719 shares of the Company’s Common Stock during the year ended December 31, 2013. It held 485,001 shares of the Company’s
Common Stock at December 31, 2013.

The Company also has both funded (Qualified) and unfunded (Supplemental) noncontributory defined benefit pension 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 investment policy of the pension plan is to invest not less than 80% of its assets, under
ordinary conditions, in equity securities and the balance in fixed income securities. The investment strategy is to invest in a portfolio
of diversified registered investment funds (open-end and exchange traded) and an unregistered partnership. Open-end funds and the
unregistered partnership are valued at net asset value based upon the fair market value of the underlying investment portfolios. Exchange
traded funds are valued based upon their closing market price.

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:

CHANGE IN BENEFIT OBLIGATION:

Benefit obligation at beginning of year
Service cost
Interest cost
Benefits paid
Actuarial gain
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

DECEMBER 31, 2013 (MEASUREMENT DATE)
QUALIFIED SUPPLEMENTAL

PLAN

TOTAL

$14,408,047
338,953
568,078
(730,777)
(1,074,745)
13,509,556

15,403,048
4,415,477
—
(730,777)
19,087,748
$5,578,192

$5,016,410
115,857
196,537
(272,034)
(429,588)
4,627,182

—
—
272,034
(272,034)
—
($4,627,182)

$19,424,457
454,810
764,615
(1,002,811)
(1,504,333)
18,136,738

15,403,048
4,415,477
272,034
(1,002,811)
19,087,748
$951,010

Accumulated benefit obligation at end of year

$12,620,383

$4,334,264

$16,954,647

CHANGE IN FUNDED STATUS:
Noncurrent benefit asset

LIABILITIES
Current benefit liability
Noncurrent benefit liability

BEFORE
$995,001

ADJUSTMENTS
$4,583,191

AFTER
$5,578,192

(274,598)
(4,741,810)

(23,522)
412,750

(298,120)
(4,329,060)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

7,772,799

(5,948,555)

1,824,244

AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME CONSIST OF:
Net actuarial (gain) loss

Prior service cost

$7,619,033
153,766
$7,772,799

($5,901,966)
(46,589)
($5,948,555)

$1,717,067
107,177
$1,824,244

WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31, 2013 AND FOR DETERMINING

NET PERIODIC BENEFIT COST FOR THE YEAR ENDED DECEMBER 31, 2013:
Discount rate

Expected return on plan assets*
Salary scale assumption

3.80%
7.50%
4.25%

3.80%
N/A
4.25%

*Determined based upon a discount to the long-term average historical performance of the plan.

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

$338,953
568,078
(986,483)

45,832
886,945
$853,325

$115,857
196,537
—

757
81,693
$394,844

$454,810
764,615
(986,483)

46,589
968,638
$1,248,169

PLAN ASSETS
The Company’s qualified pension plan asset allocation by asset class at December 31, 2013, is as follows:
ASSET CATEGORY
Equity securities
Debt securities
Money market fund
Total

LEVEL 1
$15,930,673
282,077
34,049
$16,246,799

LEVEL 2
$2,840,949
—
—
$2,840,949

LEVEL 3
—
—
—
—

TOTAL
$18,771,622
282,077
34,049
$19,087,748

EXPECTED CASH FLOWS

QUALIFIED PLAN

SUPPLEMENTAL PLAN

Expected Company contributions for 2014
Expected benefit payments:
2014
2015
2016
2017
2018
2019-2023

—

$760,683
798,702
810,719
813,796
820,666
4,252,209

$298,120

$298,120
297,089
294,996
285,025
279,684
1,276,304

TOTAL

$298,120

$1,058,803
1,095,791
1,105,715
1,098,821
1,100,350
5,528,513

The estimated amount that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2014 is $438,397.

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
provided for aggregate rental payments of approximately $10, 755, 000, net of construction credits. The lease agreement con-
tains 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 begin-
ning 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, 110,300 for the year ended December 31, 2013. Minimum rental commitments under the operating lease
are approximately $1, 183, 000 per annum in 2014 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. (the “Company”) as of December
31, 2013, 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 high-
lights are the responsibility of the Company’s
management. Our responsibility is to express an
opinion on these financial state ments and finan-
cial 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, 2013, 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, 2013, 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 7, 2014

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

Sally A. Lynch, Ph.D. (54) Vice-President of the
1997

Company since 2006,
securities analyst
(biotechnology industry)

Jeffrey W. Priest (51)
2010

Andrew V. Vindigni (54)
1988

Eugene S. Stark (55)
2005

Craig A. Grassi (45)
1991

President of the Company
since 2012 and Chief Executive
Officer since 2013,
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)

Michael Robinson (41)
2006

Diane G. Radosti (61)
1980

Vice-President, Administration Maureen E. LoBello (63)
of the Company and
Principal Financial Officer
since 2005, Chief Compliance
Officer since 2006

1992

Linda J. Genid (55)
1983

Vice-President since 2013,
Assistant Vice-President of
the Company 2005-2012
securities analyst and
information technology

Vice-President of the
Company since 2010,
securities analyst (general
industries)

Treasurer of the
Company since 1990,
Principal Accounting
Officer since 2003

Corporate Secretary since 2013,
Assistant Corporate
Secretary 2005-2012
benefits administration

Assistant Corporate Secretary
effective 2014
network 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 in April. The address for each officer is the Company’s office. All information is as of February 7, 2014.

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
6201 15th Avenue
Brooklyn, NY 11219
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, 2013 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 May 2, 2013, 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. (49)

1995

Rodney B. Berens (68)
2007

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

Co-Founder and Chairman
Kolltan Pharmaceuticals, Inc.

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

Founding Partner
Berens Capital Management, LLC
(investment management)

Lewis B. Cullman (95)
1961

Philanthropist

Gerald M. Edelman (84)

1976

Member and Professor
The Scripps Research Institute

John D. Gordan, III (68)
1986

Attorney
Beazley USA Services, Inc. (2013)
(insurance)

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

Betsy F. Gotbaum (75)
2010

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

CURRENT DIRECTORSHIPS AND AFFILIATIONS

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

Agni Capital Management Ltd., Member of Investment Committee
Alfred P. Sloan Foundation, Member of Investment Committee
Pierpont Morgan Library, Trustee and Chairman of Investment
Sub-Committee
The Woods Hole Oceanographic Institute, Trustee and Member of
Investment Committee

Chess-in-the-Schools, Chairman
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
Visiting Nurse Association of New York, Trustee

Sidney R. Knafel (83)
1994

Lead Independent Director

IGENE Biotechnology, Inc., Director

Daniel M. Neidich (64)

2007

Managing Partner
SRK Management Company
(private investment company)

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

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

Raymond S. Troubh (87)
1989

Financial Consultant

INTERESTED DIRECTORS

Spencer Davidson (71)
1995

Chairman of the Board
General American Investors
Company, Inc.
President and Chief Executive
Officer (1995-2012)

Jeffrey W. Priest (51)
2013

President of the Company
since 2012 and Chief Executive Officer
since 2013

Child Mind Institute, Director
Prep for Prep, Director
Real Estate Roundtable, Director (formerly Chairman)

Diamond Offshore Drilling, Inc., Director
Gentiva Health Services, Inc., Director
The Wendy’s Company, 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. The address for each Director is
the Company’s office. All information is as of February 7, 2014.