UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-1731

 

 

Source Capital, Inc.

(Exact name of registrant as specified in charter)

 

11400 West Olympic Boulevard, Suite 1200, Los Angeles, California

 

90064

(Address of principal executive offices)

 

(Zip code)

 

J. Richard Atwood, Treasurer, Source Capital, Inc.,

11400 West Olympic Boulevard, Suite 1200, Los Angeles, California 90064

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(310) 473-0225

 

 

Date of fiscal year end:

December 31

 

 

 

 

Date of reporting period:

March 31, 2009

 

 


 

ITEM 1. Schedule of Investments.

 

Source Capital, Inc.

Portfolio of Investments

March 31, 2009 (unaudited)

 


 

 

 

Shares or

 

 

 

 

 

Principal

 

 

 

 

 

Amount

 

Value

 

 

 

 

 

 

 

COMMON STOCKS

 

 

 

 

 

BUSINESS SERVICES & SUPPLIES — 23.1%

 

 

 

 

 

Brady Corporation (Class A)

 

431,500

 

$

7,607,345

 

Charles River Laboratories International, Inc.*

 

460,035

 

12,517,552

 

CLARCOR, Inc.

 

320,000

 

8,060,800

 

Copart, Inc.*

 

303,800

 

9,010,708

 

Life Technologies Corp.*

 

535,000

 

17,376,800

 

Manpower Inc.

 

300,000

 

9,459,000

 

ScanSource, Inc.*

 

803,363

 

14,926,485

 

 

 

 

 

$

78,958,690

 

PRODUCER DURABLE GOODS — 15.8%

 

 

 

 

 

Actuant Corporation (Class A)

 

400,000

 

$

4,132,000

 

Franklin Electric Co., Inc.

 

285,900

 

6,326,967

 

Graco Inc.

 

501,300

 

8,557,191

 

HNI Corporation

 

627,933

 

6,530,503

 

IDEX Corporation

 

540,900

 

11,829,483

 

WABCO Holdings Inc.

 

595,000

 

7,324,450

 

Zebra Technologies Corporation (Class A)*

 

486,900

 

9,260,838

 

 

 

 

 

$

53,961,432

 

RETAILING — 13.5%

 

 

 

 

 

CarMax, Inc.*

 

1,017,412

 

$

12,656,605

 

O’Reilly Automotive, Inc.*

 

700,000

 

24,507,000

 

Signet Jewelers Limited

 

773,200

 

8,853,140

 

 

 

 

 

$

46,016,745

 

TRANSPORTATION — 8.9%

 

 

 

 

 

Heartland Express, Inc.

 

1,057,000

 

$

15,654,170

 

Knight Transportation, Inc.

 

973,000

 

14,750,680

 

 

 

 

 

$

30,404,850

 

HEALTH CARE — 8.4%

 

 

 

 

 

Bio-Rad Laboratories, Inc. (Class A)*

 

187,200

 

$

12,336,480

 

Lincare Holdings Inc.*

 

468,600

 

10,215,480

 

Varian Medical Systems, Inc.*

 

40,000

 

1,217,600

 

VCA Antech, Inc.*

 

215,000

 

4,848,250

 

 

 

 

 

$

28,617,810

 

ENERGY — 7.5%

 

 

 

 

 

FMC Technologies, Inc.*

 

195,000

 

$

6,117,150

 

Helix Energy Solutions Group, Inc.*

 

660,900

 

3,397,026

 

Noble Corporation

 

670,000

 

16,140,300

 

 

 

 

 

$

25,654,476

 

 


 

TECHNOLOGY — 4.4%

 

 

 

 

 

Maxim Integrated Products, Inc.

 

392,000

 

$

5,178,320

 

Microchip Technology Incorporated

 

474,951

 

10,064,212

 

 

 

 

 

$

15,242,532

 

ENTERTAINMENT — 3.1%

 

 

 

 

 

Carnival Corporation (Class A)*

 

499,900

 

$

10,797,840

 

 

 

 

 

 

 

FINANCIAL — 3.1%

 

 

 

 

 

Brown & Brown, Inc.

 

557,300

 

$

10,538,543

 

 

 

 

 

 

 

TOTAL COMMON STOCKS — 87.8% (Cost $331,544,421)

 

 

 

$

300,192,918

 

 

 

 

 

 

 

PREFERRED STOCKS

 

 

 

 

 

REAL ESTATE INVESTMENT TRUST

 

 

 

 

 

CBL & Associates Properties, Inc.

 

100,000

 

$

635,000

 

ProLogis (Series G)

 

120,000

 

937,200

 

TOTAL PREFERRED STOCKS — 0.5% (Cost $5,726,454)

 

 

 

$

1,572,200

 

 

 

 

 

 

 

CONVERTIBLE BONDS AND DEBENTURES

 

 

 

 

 

Diodes, Inc. — 2.25% 2026

 

$

2,000,000

 

$

1,542,500

 

Sealed Air Corporation — 3% 2033

 

2,000,000

 

1,847,500

 

Transocean, Inc. — 1.5% 2037

 

2,000,000

 

1,710,000

 

TOTAL CONVERTIBLE BONDS AND DEBENTURES — 1.5% (Cost $4,560,000)

 

 

 

$

5,100,000

 

 

 

 

 

 

 

NON-CONVERTIBLE BONDS AND DEBENTURES

 

 

 

 

 

CORPORATE — 5.2%

 

 

 

 

 

Brown Shoe Company, Inc. — 8.75% 2012

 

$

3,000,000

 

$

2,422,500

 

Central Garden & Pet Company — 9.125% 2013

 

3,000,000

 

2,310,000

 

Deluxe Corporation — 5% 2012

 

2,000,000

 

1,500,480

 

Helix Energy Solutions Group, Inc. — 9.5% 2016

 

2,000,000

 

1,170,000

 

Invacare Corporation — 9.75% 2015

 

3,000,000

 

2,887,500

 

Nova Chemicals Corporation — 6.5% 2012

 

1,970,000

 

1,717,446

 

PolyOne Corporation — 6.58% 2011

 

1,500,000

 

675,270

 

Rock-Tenn Co. — 9.25% 2016†

 

2,000,000

 

1,988,980

 

Titan International, Inc. — 8% 2012

 

3,000,000

 

2,347,200

 

Unisys Corporation — 6.875% 2010

 

2,000,000

 

845,040

 

 

 

 

 

$

17,864,416

 

U.S. GOVERNMENT AND AGENCIES — 0.0%

 

 

 

 

 

Government National Mortgage Association (Mobile Home) — 9.75% 2010

 

$

60,297

 

$

62,236

 

 

 

 

 

 

 

TOTAL NON-CONVERTIBLE BONDS AND DEBENTURES — 5.2% (Cost $23,238,637)

 

 

 

$

17,926,652

 

 

 

 

 

 

 

TOTAL INVESTMENT SECURITIES — 95.0% (Cost $365,069,512)

 

 

 

$

324,791,770

 

 


 

SHORT-TERM INVESTMENTS — 5.0% (Cost $16,998,670)

 

 

 

 

 

Toyota Motor Credit Corporation — 0.15% 4/1/09

 

$

6,006,000

 

$

6,006,000

 

Toyota Motor Credit Corporation — 0.18% 4/7/09

 

10,993,000

 

10,992,670

 

 

 

 

 

$

16,998,670

 

TOTAL INVESTMENTS — 100.0% (Cost $382,068,182) — Note 2

 

 

 

$

341,790,440

 

Other assets and liabilities, net — 0.0%

 

 

 

10,719

 

TOTAL NET ASSETS — 100.0%

 

 

 

$

341,801,159

 

 

*Non-income producing security

 

†                  Restricted security purchased without registration under the Securities Act of 1933 pursuant to Rule 144A, which generally may be resold only to certain institutional investors prior to registration. The Rock-Tenn Co. 9.25% note due 2016 constituted less than 0.6% of total net assets at March 31, 2009.

 

NOTE 1 — Disclosure of Fair Value Measurements

 

The Fund adopted Statement of Financial Accounting Standards No. 157 (FAS 157), Fair Value Measurements. FAS 157 requires the Fund to classify its assets based on valuation method, using three levels. Level 1 investment securities are valued based on quoted market prices in active markets for identical assets. Level 2 investment securities are valued based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs. Level 3 investment securities are valued using significant unobservable inputs that reflect the Fund’s determination of assumptions that market participants might reasonably use in valuing the assets. The valuation levels are not necessarily an indication of the risk associated with investing in those securities. The following table presents the valuation levels of the Fund’s investments as of March 31, 2009:

 

Level 1 — Quoted Prices

 

 

 

$

301,765,118

 

Level 2 — Other significant observable inputs**

 

 

 

40,025,322

 

Level 3 — Significant unobservable inputs

 

 

 

—

 

Total investments

 

 

 

$

341,790,440

 

 

**  Includes $16,998,670 of short-term investments with maturities of 60 days or less that are valued at amortized cost.

 


 

NOTE 2 — Federal Income Tax

 

The aggregate cost of investment securities was $365,540,529 for Federal income tax purposes. Net unrealized depreciation for Federal income tax purposes consists of:

 

Gross unrealized appreciation:

 

 

 

$

38,806,494

 

Gross unrealized depreciation:

 

 

 

(79,555,253

)

Net unrealized depreciation:

 

 

 

$

(40,748,759

)

 


 

ITEM 2. CONTROLS AND PROCEDURES.

 

(a)                                  The principal executive officer and principal financial officer of the registrant have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this report.

 

(b)                                 There have been no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.

 

ITEM 3. EXHIBITS.

 

(a)                                  Separate certification for the registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940. Attached hereto.

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange  Act of  1934  and  the  Investment  Company  Act  of  1940,  the registrant has duly caused this report to be signed  on  its behalf by the undersigned, thereunto duly authorized.

 

SOURCE CAPITAL, INC.

 

 

By:

/s/ ERIC S. ENDE

 

Eric S. Ende, President

 

(Principal Executive Officer)

 

 

Date:    May 22, 2009

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant  and  in the capacities  and  on  the  dates indicated.

 

SOURCE CAPITAL, INC.

 

 

By:

/s/ ERIC S. ENDE

 

Eric S. Ende, President

 

(Principal Executive Officer)

 

 

Date:    May 22, 2009

 

 

By:

/s/ J. RICHARD ATWOOD

 

J. Richard Atwood, Treasurer

 

(Principal Financial Officer)

 

 

Date:    May 22, 2009