Short-sellers and hedge funds, although sometimes shadowy, are often seen as the smartest guys in the room. They've done their homework and will bet their capital against the crowd. It's not the most popular way to go, but the rewards can be quite lucrative.

On Motley Fool CAPS, we've got our own brand of leading analysts who found the chinks in a company's armor and correctly called its fall. "Underdogs" are investors who earned 100 or more CAPS points correctly predicting a stock would underperform the market.

Let's look at some of the recent calls these All-Star investors have made. Yet, just as hedge fund operators don't always go short, we're going to look at recent Underdog picks, no matter which way they've called them.

Underdog

Member Rating

Company

CAPS Rating
(5 max)

Call

TrackBofASec

97.59

Amgen (NASDAQ:AMGN)

****

Outperform

Godwynn

91.59

Agrium (NYSE:AGU)

***

Outperform

tjnarumo

98.95

Qiao Xing Universal Telephone (NASDAQ:XING)

****

Outperform

mgiv

99.90

KB Homes (NYSE:KBH)

*

Underperform

spirit5458

99.54

Applied Energetics (NASDAQ:AERG)

*

Underperform

Not every short-sale goes as planned, so it's a risky position to hold. Stock prices can be irrational longer than you have money to stay in the game. So don't use this as a list of stocks to sell or buy, but rather as the launching pad for further research.

Not hanging up on growth
The decrease in the average selling prices of mobile handsets in China was bound to have an impact on Qiao Xing, which reported that although profits for the quarter rose, revenues dropped 12% as a result. Gross margins, however, improved to 28%, from 22% a year ago. And though its filings have been delayed in the past, management says it is committed to having its stock represent the full value of the company by providing more timely information for shareholders.

The company's opaqueness in its dealings with shareholders turned off investors like CAPS member Haugurafpeningum:

I'm starting to belive that this is in deed a scam. No news no filings and no working homepage. I do not hold any positions in this company and I don't intend to do so.

If Qiao Xing wants to be one of the biggest mobile-handset sellers in China, and keep Nokia (NYSE:NOK) from further taking market share, it'll need more deeds than words to earn the respect and trust of the investment community.

Profitability is not a commodity
Rising prices for nitrogen, potash, and phosphates have been fertilizing the roots of Agrium's growth initiatives. Profits more than doubled in the second quarter, helped along by its acquisition of United Agri-Products, which helped boost its market share for retail products to 16%.

Demand remains strong for fertilizers, and with shares of Agrium trading one-third below their early summer highs, investors like top-rated CAPS All-Star member ypcheng view the agricultural products retailer as a cheap bargain:

The worldwide agriculture demand will continue. With forward P/E less than 10 and a PEG less than 1, this company is a buy.

Hammering away at housing
It's tough to see the silver lining with all the clouds hovering over homebuilder KB Homes. In its second quarter, revenue dropped 55% and its losses increased by 70%, to $3.30 a share, as inventory continued to climb and its joint ventures continued to take impairment charges. While those charges were less than a year ago, they remain significant at $176 million and hold back the ability of the homebuilder to live up to its obligations. Just last week it defaulted on a $3 million payment to the Vallejo City school district, which it blamed on the slow housing market and the city's own bankruptcy declaration.

CAPS member joker245 thinks the possibility of a bankruptcy filing for KB Homes and some of the other more troubled builders is a very real possibility:

People who think the huge players in this business like KB or Pulte (NYSE:PHM) are immune from chapter 11 have no idea how long and severe the current real estate plunge will be. We have markets with three-plus years of supply and that doesn't take into account the units that are in the pipe. The rub of it is that the builders have to either (1) keep building or (2) close their doors. The demand just isn't there for option 1, which means even larger concerns like KB are going down. In fact, they're already laying off people all over the country in anticipation of a protracted downturn. Don't get me wrong, they'll still be around in 5-10 years, but they'll have gone through a reorg in the meantime with equity holders having been wiped out.

There's no need to fear ...
When underdogs have their backs against the wall, that's when they can shine their brightest. It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Grab your superhero cape and head over to Motley Fool CAPS, where your opinion can save the day.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.