Earnings season is upon us, and to many, it's not looking awesome. Wells Fargo equity strategist Gina Martin Adams went as far as to say that it is "likely to be the most challenging earnings season for U.S. companies since the 'Great Recession.'"
Oy.
But it's not all bad news. JPMorgan and Wells Fargo have beat expectations with their reports, and there's no guaranteeing some "outside surprise" won't come out of the woodwork.
Billionaire hedge fund managers like Carl Icahn, Bill Ackman and Warren Buffett are certainly keeping a close eye on how their investments fare this earnings season. They're placing their chips accordingly as well.
Here are three sectors where billionaires are buying as earnings season kicks off.
Energy
Energy and oil have become bad words on Wall Street in recent months. Energy companies have slashed their earnings guidance by as much as 60%, and the sector is among the biggest drags on the first quarter's growth picture. Despite a somewhat bleak picture, some billionaires are still buying – namely, Icahn.
Icahn raised eyebrows in March when a regulatory filing revealed he had purchased an additional 6.6 million shares of Chesapeake Energy on the 11th of the month, boosting his stake in the Oklahoma-based oil and gas company to 11%. The billionaire's disclosure came in parallel with an announcement from Chesapeake that it would be reducing its 2015 capital budget and reducing its production outlook.
Carl Icahn is in deep on Chesapeake – and on energy overall – and by the looks of it, he's not backing down. He left his stakes in CVR Energy, CVR Refining, Talisman Energy, Transocean and Seventy Seven Energy (a spinoff of Chesapeake) untouched in the fourth quarter of 2014.
At the start of 2015, the billionaire said in a CNBC interview that he believes oil prices would go lower. At the same time, he said he perceived a "tremendous opportunity" for when oil eventually rises. "I wouldn't rush into oil now, and that's talking against myself because I own a lot of oil stocks," he said.
Health
A big bet on Allergan drove much of Ackman's incredible 2014 run. And when Actavis' takeover of the Botox maker was confirmed, many thought the billionaire would be taking a time out on the health care sector. Instead, he's done quite the opposite.
