Amtrak (officially the National Railroad Passenger Corporation) is the primary provider of medium- and long-distance intercity passenger rail service in the United States. At first glance, it looks like a regular company: it has a corporate name, a CEO, and it sells a service to customers. However, don't rush to your brokerage account just yet. Amtrak is a quasi-public corporation, a unique beast in the corporate world. It was created by the U.S. Congress in 1970 to take over the money-losing passenger routes that private railroads were eager to abandon. While technically structured as a “for-profit” corporation, its stock is not publicly traded. The U.S. government owns almost all of its preferred stock, meaning ordinary investors cannot buy a piece of the company. It operates in a perpetual grey area—run like a business but funded like a government service, making it a fascinating case study but not a direct investment opportunity.
The short answer is: because the government got there first. The entire structure of Amtrak was designed to serve a public policy goal, not to generate returns for shareholders.
Amtrak was born out of the Rail Passenger Service Act of 1970. By the late 1960s, private railroads were hemorrhaging money on passenger service due to competition from cars and planes. The U.S. government stepped in, creating Amtrak to maintain a national passenger rail network. In exchange for being relieved of this financial burden, the private railroads contributed cash and equipment, receiving Amtrak stock in return. However, the federal government has always been the primary financial backer and, for all practical purposes, the owner. The goal was to preserve a service deemed essential, not to build a profitable enterprise. For a value investor, a company's origin story is crucial, and Amtrak's story is one of rescuing a failing service, not capitalizing on a market opportunity.
The “for-profit” designation is one of the most misleading aspects of Amtrak's structure. A true for-profit company must, over the long term, generate more revenue than it spends. Amtrak has never achieved a full-year profit in its five-decade history. It consistently requires billions in federal subsidies just to cover its operating expenses and massive capital expenditures for things like new trains and track maintenance. Its economic moat—a key concept for value investors representing a company's competitive advantage—is entirely artificial. It exists only because of government mandates and funding, not because it has outcompeted rivals or built a superior, self-sustaining business model.
If Amtrak were a publicly traded company, its financial statements would send most value investors running for the hills. The business is characterized by high fixed costs, operational challenges, and a fundamental reliance on external funding.
Here’s a critical fact: Amtrak owns only about 3% of the 21,400 miles of track it operates on. The vast majority is owned by private freight railroad companies like Union Pacific and CSX. This creates two major problems:
The one major exception is the Northeast Corridor (NEC) from Boston to Washington, D.C., where Amtrak owns most of the track. Unsurprisingly, this is the busiest and most financially successful part of its network, highlighting the immense disadvantage it faces elsewhere.
Revenue from ticket sales, food, and beverages simply doesn't cover the enormous cost of running a national rail network. Without annual appropriations from Congress, Amtrak would cease to operate. From a value investor's perspective, this is the ultimate red flag. A core tenet of value investing is finding businesses that can generate their own cash flow and grow their intrinsic value over time. A business that depends on political goodwill for its survival is the antithesis of a durable, predictable investment.
So, you can't buy Amtrak stock. But if you're passionate about passenger rail, are there other ways to invest in the theme? Absolutely.
The most logical alternative is to invest in the companies that own the tracks: the major freight railroads. Publicly traded companies like Union Pacific, CSX, and Norfolk Southern are the landlords of the rail world. They own the physical infrastructure and have powerful, durable business models. Even Warren Buffett's Berkshire Hathaway made a huge bet on this industry by acquiring BNSF Railway. These companies not only profit from moving freight but also collect a steady stream of revenue from Amtrak for track access. They offer the exposure to the railroad industry that Amtrak itself cannot.
For those more interested in income than growth, Amtrak does issue bonds to fund specific capital projects. These are often structured as tax-advantaged municipal bonds. When you buy a bond, you are lending money to the issuer in exchange for regular interest payments. This is a fixed-income investment, not an equity investment, so you won't participate in any potential “growth.” Given Amtrak's relationship with the U.S. government, these bonds are generally considered very safe. However, as with most safe investments, the yields are typically low. It’s a way to lend to the railroad, not own it.