Using the investment ideas of billionaire investors and money managers is a good launching pad for your own stock research. 

Now, don't blindly follow the so-called smart money, because even they get it wrong sometimes. Just look at how Warren Buffett came to quickly regret his airline investments to understand that even the best stock pickers can err. Long gaps can also occur between when they've bought the stocks and when they report it, so the initial thesis may have changed.

But seeing the stocks they picked as the basis for beginning your due diligence is a great start, and the two stocks below were bought by some of the best in the business, so let's see if they are still worthwhile investments.

Thoughtful woman looking at lit light bulb

Image source: Getty Images.

Callaway Golf

Jim Cramer recently put his stamp of approval on golf club and accessories maker Callaway Golf (NYSE:ELY) because "That's one of the few sports you're allowed to do [during the COVID-19 pandemic]."

Yet before he weighed in, Prem Watsa, who has been dubbed Canada's Warren Buffett, disclosed he had taken a small stake in Callaway, some 47,000 shares valued at $480,000, which suggests a value of around a $10 per share.

When Callaway reported first-quarter earnings last month, President and CEO Chip Brewer said the golf pro had been "on track for another record sales year, which would have made it our fourth consecutive record year." But it ran into the brick wall of the pandemic, and now it expects the crisis to have "a significant impact on our results."

Brewer says it's only temporary, though, because, as Cramer intimated, it's a sport that's compatible with social distancing.

Callaway's stock has risen nearly 250% since the March lows and currently sits around $16.50 per share, though that's still some 25% below the highs it hit earlier this year. Activist investor Jana Partners may think the golfing specialist has landed in the rough. 

One year ago, the private equity firm revealed it had taken a 9% stake in Callaway with an eye toward having the company sell all or parts of its business, but that may no longer be a priority as it has since pared its holdings in the company. 

Earlier this year, Jana cut its stake by 17%, then just this month cut it almost another 10% to 5.9 million shares, or 6.3% of the total shares outstanding. While the number of rounds of golf played in the U.S. has been in decline, or at best flat, for years, Golf Datatech says they bounced 1.5% higher in 2019.

Investors believing that golfers will return to the green in a post-COVID-19 world may want to tee up Callaway Golf's stock.

Ulta Beauty

Although virtually every company was hurt in some way by the coronavirus outbreak, beauty salons like Ulta Beauty (NASDAQ:ULTA) were among those severely affected because they were included in the first industries that were forced to completely close down.

Even today, they are only just beginning to reopen in a handful of states, but famed value investor Chris Davis of Davis Selected Advisors sees the personal care specialist as a company with potential, acquiring nearly 3,100 shares worth over half a million dollars, or about $175 a share.

While Ulta's stock goes for just under $200 a share now, that's down from the $260 a share it hit as hopes for a recovery were taking hold. The month of June is seeing a surge in new COVID-19 cases, and states may take a look at imposing new restrictions. Texas, for instance, just announced it was going to "pause" its reopening plans after new cases and hospitalizations jumped.

Despite an economy reopening in fits and starts, Ulta can still win going forward because of its strong position in the market. 

Most Ulta Beauty stores are not located in shopping malls, which are in serious decline, but rather in off-mall locations known as power centers. It may also gain from J.C. Penney's bankruptcy, which will see it close over 100 stores, as well as from the desire by the department store chain's cosmetics partner Sephora wanting to close up the store-in-store boutiques it operated.

Ulta's recent earnings report was a disappointment, particularly as e.l.f. Beauty did so well. But the personal care leader has a strong balance sheet, was one of the industry's growth leaders before the pandemic, and had invested heavily in its omnichannel capabilities.

Ulta's currently depressed price looks like a beautiful time to get into this stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.