Short-sellers and hedge funds, though sometimes shadowy, are often seen as the smartest guys in the room. They do 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 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 that one or more stocks 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 go.

Underdog

Member Rating

Company

CAPS Rating (out of 5 max)

Call

chk999

100.00

US Bancorp (NYSE:USB)

****

Outperform

OOji

100.00

Zoltec (NASDAQ:ZOLT)

***

Underperform

vanamonde

99.99

MasterCard (NYSE:MA)

***

Outperform

nicvo

99.99

Radian Group (NYSE:RDN)

**

Underperform

LurkyLurky

99.98

EMCORE (NASDAQ:EMKR)

*

Underperform

Not every short sale goes as planned, making them risky positions 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.

Underdogs still wag their tails
This week, it's a brave new world out there and no one really knows how it's going to go. What might be happening, though, is that some of the pressure that had been bearing down on the housing market may be easing, but whether the solution will be a long-term fix remains to be seen. It was enough to boost mortgage insurers Radian Group and PMI Group (NYSE:PMI), because relief to distressed homeowners may minimize claims from defaulting borrowers.

CAPS member Cbou101 was one of a handful of people to see the opportunity in Radian Group last week, scoring some serious CAPS points in the process:

I like their capitol position. It looks like they may have enough to weather the mortgage storm. Especially where Fannie and Freddie are once again solid. Look for [Radian and Old Republic] to be the only ones left standing. I look for MGIC [Investment] and PMI [Group] to drop out.

When it comes to EMCORE, it seems there's no middle ground: You either support the company's efforts to become a solar play, or you think that it's never been profitable and probably won't ever be. CAPS member mdriver78 seems to have taken at least a dispassionate stance, while believing that EMCORE can succeed:

Concentrated photovoltaics leader plans to spin off the solar business in 2009. The EMKR conversion efficiency is greater than some rivals and oil will have to decline a long way from $100 per barrel to stop the alternative energy craze.

That won't mollify the critics, of course, but at least it might lower the decibel level a bit when it comes to discussing the company.

CAPS member str1k3outs27 is able to look at MasterCard dispassionately as well; even though it's off its 52-week high, it still has plenty of opportunities in emerging markets, though Visa (NYSE:V) could do just as well:

Personally I go against the grain and would prefer Visa over Mastercard. However this sector is so hot and has so much potential as emerging markets move into the global economy. mastercard has 600 - 700 million cards distributed world wide. Given that a bulk of the profits for this company are derived from transaction fees, Mastercard should have strong profits quarterly. ... Because of all the worries in the financial sector even these stead fast companies have been discounted.

There's no need to fear ...
When underdogs have their backs against the wall, they can shine their brightest, but it pays to start your research on these stocks on Motley Fool CAPS, where your opinion can still save the day. You can 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. There's more than you think.

US Bancorp is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days.

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