"The bigger they are, the harder they fall." It's the worst nightmare of every investor in today's market -- buying a hot stock just before it takes a nosedive.

Every day, Nasdaq.com publishes a list of stocks whose shares have just hit new 52-week highs. And every day, investors read the list and tremble -- some with greed, others with terror. On our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, since everyone loves a winner. But what should you do when some of CAPS' smartest investors pan one of these hot stocks?

For starters, consider using the "52 week high" list as a starting point for further research. Stocks can rise for many reasons, but a little help from Motley Fool CAPS can make it easier to figure out how worthy those reasons are. Let's see what the more than 79,000 stock gurus (and counting) in CAPS have to say about the list's latest contenders:

One Year Ago

Currently Fetching

CAPS Rating

K-Tron

$74.67

$120.00

*****

Power Integrations  (NASDAQ:POWI)

$23.45

$34.52

*****

Repligen (NASDAQ:RGEN)

$2.81

$6.37

*****

CR Bard  (NYSE:BCR)

$82.97

$95.05

***

I-Many  (NASDAQ:IMNY)

$1.65

$3.34

**

Five stars = highest possible CAPS rating; one star = lowest. Companies are selected from the "NASDAQ 52 Week High" list published on Nasdaq.com on the Saturday following close of trading last week. One year ago and current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

When stocks soar on the wings of success, bears become rare -- so it's hardly surprising that nearly every stock on today's list enjoys wild adulation from the throng. CAPS has spread mostly above-average ratings all around, with one incongruously named exception: I-Many.

The bear case against I-Many
I have to admit -- I'm starting this column biased in I-Many's favor. As a lawyer by training, the company's business model appeals to me: Write software to help track and organize corporate contracts from start to finish? Great idea!

Many investors agree, and they've bid these shares up by 100% during 2007. Even on CAPS, a sizeable majority of raters (out of an admittedly small total) give I-Many the thumbs-up. Only two Fools have broken from the herd, writing pitches to explain their negative sentiment:

  • CAPS All-Star chk999, who calls I-Many a "bad business with a bad balance sheet." (The pitch may be skimpy, but pay special notice to chk999's rank on CAPS -- as I write, he's the 16th best player in the system.)
  • And NJHowie, who asks: "What exactly does this company do other than lose money?"

Well, that's easy enough to answer. According to I-Many itself, it is:

... the leading provider of contract management software and services for the enterprise. With more than 280 customers [including brand-name firms like Procter & Gamble (NYSE:PG), Kodak (NYSE:EK), and Eli Lilly (NYSE:LLY)] across 21 industries worldwide, I-Many is enabling businesses to manage the entire contract lifecycle, from pre-contract processes and contract management to active compliance and contract optimization. The result is an end-to-end solution that provides enterprises with greater levels of insight into contract performance, allowing companies to improve profitability and achieve measurable return on investment.

Clear enough?

I suspect NJHowie's question was more rhetorical in nature -- and it's also right on point. Established in 1989, I-Many has gone eight years since it last earned a profit. Moreover, things only seem to be getting worse. Sales may be increasing a bit, but I-Many has increased its cash burn rate in each of the last three years. In short, I agree with chk999 and NJHowie on this one: I-Many is indeed ready to fall.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about I-Many -- or even what other CAPS players are saying. We also want to hear your thoughts on the company. If you've got an opinion, we've got a place to voice it.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Fool contributor Rich Smith does not own shares of any company named above. Eli Lilly is a Motley Fool Income Investor pick. You can find Rich on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 868 out of more than 41,000 rated players. The Fool has a disclosure policy.