Short-sellers and hedge funds, although sometimes shadowy, are sometimes seen as the smartest investors 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 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 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 called them.


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Research In Motion (NASDAQ:RIMM)



Not every short sale goes as planned, so it's a risky position to hold. Stock prices can be irrational for 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
Internet gaming carries a sexier cachet than does enterprise software applications; that might explain why investors are happier to focus on CDC Corp.'s gaming side than on its business software unit, even though the latter accounts for more than 85% of its revenues.

Of course, it might just be a more compelling investment angle, too. Although revenues from its CDC Games division fell 27% last quarter, the company believes it was in large part a result of players suspending their play while awaiting the launch of its newest game, Yulgang. In the six weeks following the online game's debut at the end of March, CDC reports, it has seen a 45% increase in average daily revenue, with more than 78 million registered players, making it the most popular game in CDC's portfolio.

It still faces stiff competition from the likes of (NASDAQ:NTES), which saw its revenues climb 20% in the first quarter. As it also is taking over the China franchise of World of Warcraft, growth could zoom higher, although the outage of the game until later this month -- as the transition from The9 (NASDAQ:NCTY) to NetEase is completed -- is no doubt giving diehard WoW players withdrawal jitters.

It also highlights why CDC is spinning off its enterprise applications unit, called CDC Software, giving investors who want to focus only on that aspect of the company a more targeted way of doing so.

Top-rated CAPS All-Star TSIF feels that the sum of CDC's parts gives it the chance to score big:

CDC Corp (China) is a cheap shot on my part to try to score big. While profitability is elusive for CDC, they are in a growth market and seem to be gaining traction. Their various divisions, software, mobile service, Internet, media and gaming seem to oscillate out of tune with each other. The sum of the parts gives them huge potential, but a serious tune up is needed. It does appear that the gaming side has a chance to shine and pull up the rest. With it's multi-continent reach and it's base in Hong Kong I think CDC has great potential. If they ever get firing on all cyclinders they will hum around the race track so fast that this sluggish start will be a distant memory. If they continue to have flat tires then a buyout is not unrealistic.

The 200 "China"-tagged stocks have risen more than 20% over the past month, putting it in the top 50 sectors in the CAPS universe.

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 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 than you think.

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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. Elan and are Motley Fool Rule Breakers selections. The Motley Fool has a stress-free disclosure policy.