Short-sellers and hedge funds, though sometimes shadowy, are sometimes seen as the smartest guys in the room. They did 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 correctly called a company's fall. "Underdogs" are investors who have earned 100 or more CAPS points by 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. Just as hedge fund operators don't always go short, we'll look at recent Underdog picks whether they're bullish or bearish.

Underdog

Member Rating

Company

CAPS Rating (out of 5 max)

Call

TheGreatSatan

99.97

YRC Worldwide (NASDAQ:YRCW)

**

Underperform

MLG100

99.82

Huntington Bancshares (NASDAQ:HBAN)

*

Underperform

cheesepare

99.05

Gulfport Energy (NASDAQ:GPOR)

****

Outperform

Wiiz

98.85

E*Trade Financial (NASDAQ:ETFC)

****

Outperform

tjnarumo

93.78

SanDisk (NASDAQ:SNDK)

***

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 -- just as a launching pad for further research.

Underdogs still wag their tails
When TD AMERITRADE (NASDAQ:AMTD) took over my Datek account a few years ago, I was concerned about having to accept tradeoffs that weren't always to my advantage. Over the years, though, I've been generally satisfied with my level of service, order execution, and research offerings.

Still, it's easy for me to sympathize with any E*Trade accountholders who fear that the financial-services brokerage may get taken over by a rival while in a weakened state -- if it doesn't totter off into bankruptcy first.

CAPS member BringUs recounts his love-hate relationship with E*Trade:

E*Trade Bank made smart moves to position themselves to weather the storm (e.g. paused lending, figured out what was going on, then restarted with a new focus). They were also quick to shore up cash to back up bad loans and kept the ship afloat without wailing for TARP money. On top of the right moves on the bank side, they are also continuously growing their brokerage business with the increased trading activity. If I were someone looking to open a new brokerage account, the baby commercials definitely come to mind and remind me that they're alive and kicking.

The $150 million E*Trade expects to raise from a stock sale to satisfy regulators' demands could be just what the brokerage needs to reduce its debt and bolster its financial position. And innovative apps on the Apple (NASDAQ:AAPL) iPhone should allow it to reach more investors and win over more accounts.

There's no need to fear ...
Underdogs can shine brightest when their backs are against the wall. Still, it takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions. Start your own research on these stocks on Motley Fool CAPS, where your opinion can still save the day. While 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.

Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services 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 here. The Motley Fool has a stress-free disclosure policy.