The short answer to the question is "most of the big U.S. airline stocks." Late in 2016, Berkshire's Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) third-quarter SEC filings shocked the investing world when substantial stakes in four major U.S. airlines were revealed. Warren Buffett's dislike for the airline industry as an investment was well-known, so the addition of these four airlines could be a big endorsement of a change in the industry's fundamentals.

When they were first added to Berkshire's portfolio, the airlines represented relatively small investments by Buffett's standards. However, Berkshire's latest SEC filings showed that the airline holdings in the portfolio dramatically increased during the fourth quarter, and are now worth a combined $9 billion, representing stakes of 7%-10% in each of the four companies.

Warren Buffett at Berkshire Hathaway's annual meeting.

Image source: The Motley Fool.

Berkshire Hathaway's airline stocks

Airline

Recent Share Price

Number of Shares Berkshire Owns

Value of Investment

American Airlines

$41.73

45,544,854

$1.9 Billion

Delta Air Lines

$46.00

60,025,995

$2.8 Billion

United Continental

$67.93

28,951,353

$2.0 Billion

Southwest Airlines

$52.61

43,203,775

$2.3 Billion

Source: Berkshire Hathaway SEC Filings, current as of 12/31/2016. Share prices are as of 3/26/2017.

Berkshire Hathaway invested in these airlines, which happen to be the four largest airlines in the United States, and are listed in size order in the chart above. In fact, American Airlines Group (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), and United Continental Holdings (NYSE:UAL), are the three largest airlines, by revenue, in the entire world. Southwest Airlines (NYSE:LUV) is the seventh-largest airline in the world, and has grown rapidly over the past couple of decades. In fact, Southwest's revenue has more than doubled since 2007.

Why did Buffett finally invest in airlines?

The reason that the airline investments were so surprising to many Buffett followers was that the Oracle of Omaha has been so negative on the airline industry for such a long time. Buffett invested $350 million in US Airways preferred stock, an investment he later came to regret, and Buffett stayed away from airline investments from that point on.

In fact, as recently as Berkshire's 2013 annual meeting, Buffett referred to the sector as having "been a death trap for investors." In 2007, Buffett even went so far as to say, "The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, then earns little or no money. Think airlines."

According to reports, a presentation from American Airlines CEO Doug Parker had a lot to do with changing Buffett's mind. In a nutshell, it appears that Buffett is far more bullish on the airline industry as a business now that there are only a few major airlines left after years of consolidation and bankruptcies.

Buffett's right-hand man, Charlie Munger, said that "It (the railroad industry) was a terrible business for 80 years...but they finally got down to four big railroads, and it was a better business. And something similar is happening in the airline business."

Because of comments like this, and given that Berkshire acquired BNSF railroad after similar industry consolidation, and under similar circumstances, it's been speculated that Buffett may eventually try to take over one of the airlines, especially if the stock prices weaken. Before acquiring BNSF in 2010, Berkshire had acquired a major stake in the railroad, as well as rivals Union Pacific Corp. and Norfolk Southern Corp., selling the others shortly after the BNSF acquisition.

Matthew Frankel owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.