Short-sellers and hedge funds, though sometimes shadowy, are often seen as the smartest guys in the room. They did their homework and will bet their capital against the crowd. Theirs is not the most popular way to go, but the rewards can be quite lucrative.

On Motley Fool CAPS, we have our own brand of leading analysts who've found the chinks in certain companies' armor and correctly called their fall. "Underdogs" are investors who have 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've been called.

Underdog

Member Rating

Company

CAPS Rating (5 Max)

Call

XMFHamp

96.53

Disney (NYSE:DIS)

****

Outperform

Plumbroke200

99.51

Terex (NYSE:TEX)

****

Outperform

supercoffee

97.60

New York Times (NYSE:NYT)

*

Underperform

dbhealy

99.87

Visa (NYSE:V)

****

Outperform

ValueRider

99.66

E*Trade Financial (NASDAQ:ETFC)

****

Underperform

Not every short sale goes as planned, so going short is risky. 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
I'm used to getting credit card offers from Visa and MasterCard (NYSE:MA) asking me to switch balances to get their zero-interest specials. I used to play that game and was able to pay off my balances for little more than the transfer fee. Now, the deals aren't so sweet. Instead, those same companies are now offering rates as high as 10% as the credit crisis widens. 

CAPS All-Star InvestRx sounds anything but bullish in his assessment of credit card issuer Visa, which he predicts is the next looming disaster: "With the economic downturn, rising unemployment, decline in house prices, and limited ability for consumers to continue using their homes as an ATM, credit card debt is poised to be the next disaster in the financial sector with bearish outlooks for credit lenders [Capital One, Discover Financial Services], and American Express (NYSE:AXP). Credit card processors such as Visa and MasterCard have also declined with the overall market, but are leveraged to the volume of transactions with debit and credit cards rather than credit quality as the pure-play lenders."

Meanwhile, the global market for capital equipment has seen its horizons expand over the past few years, but many analysts are expecting the good times to come to a crashing halt. That spells trouble for heavy-equipment operators such as Terex, which receives more than two-thirds of its revenue from markets outside the United States. Yet 98% of those rating Terex on CAPS believe it will outperform the market, and All-Star member DemonDoug thinks the lows that commodities hit last month represent a bottom: "I firmly believe that oil and materials have [bottomed] in 9/08, and this is the time to go long on good solid companies that will benefit from a weak dollar policy with too many dollars chasing too few hard assets. Terex has shown some good growth in the past few years and at this level I'm calling outperform on a low in oil."

There's no need to fear ...
When underdogs have their backs against the wall, that's when they can shine their brightest, but it takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions. So start your own research on these stocks on Motley Fool CAPS where your opinion can still save the day. While you're there, 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 at CAPS than you think.

American Express and Discover Financial are Motley Fool Inside Value recommendations. Disney is a Stock Advisor pick. The Fool owns shares of American Express and Terex. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey owns shares of Disney but has no financial position in any of the other stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.