Short-sellers and hedge funds, though sometimes shadowy, are sometimes seen as the smartest folks 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.

Underdog

Member Rating

Company

CAPS Rating
(5 stars max.)

Call

EverydayInvestor

100.00

Amgen (NASDAQ:AMGN)

****

Outperform

goldminingXpert

100.00

Citigroup (NYSE:C)

**

Outperform

chk999

99.99

Coca-Cola (NYSE:KO)

****

Outperform

tenmiles

99.99

3M (NYSE:MMM)

****

Outperform

nicvo

99.99

First Solar (NASDAQ:FSLR)

**

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.

Underdogs still wag their tails
Solar energy has been looking for sunnier days after the market's collapse last year, which caused the stocks of many high-flying solar stocks to plunge. First Solar, once trading above $300 a share, is now closer to $100. Suntech Power (NYSE:STP), which once breached $50 a stub, now sits below $10.

It's not that the businesses are broken. First Solar remains a first-rate thin-film photovoltaic (PV) panel manufacturer, generating more than $1.2 billion in sales last year, double what it did in 2007. But there were enough sunny expectations built into the stock price that the least cloud would cause rain on its parade. A veritable storm front moved in though, and some investors chose not to listen to the inconvenient truths.

So when Sempra Energy (NYSE:SRE) indicated it was going to add 50 megawatts to its 10-megawatt solar energy plant -- and contract again with First Solar for the panels -- investors assumed the sun was shining on it again and caused the panel maker's shares to jump 6% on the news -- and rise an additional 25% over the next week and a half. Although any new deals are welcome, investors should be cautious about bidding up shares so dramatically.

The Sempra deal is only a small percentage of First Solar's capacity. Management indicated it expected to reach 1 gigawatt of capacity in 2009, a little more than double what it achieved in 2008, but the 50 megawatts attributed to Sempra -- even if it were fully completed this year -- would equate to only about 5% of that total. It seems a bit too much enthusiasm given the size of the agreement, which hasn't even been signed yet.  

There are other issues facing First Solar as well as the industry. Declining government subsidies for solar initiatives might result in fewer projects. Credit markets are still tight and industry oversupply may impede short-term growth. Also, the company's plan to finance its customers to avoid order cancellations is a fairly risky undertaking, causing even the solar panel producer to expect a frost near term.

CAPS All-Star xeaglekeeper would agree, thinking that as successful as First Solar has been, it is only going to attract more competitors over time:

Time to jump off the band wagon. Priced too high for the market of today. A lot of players entering the field. Various technologies. Once a company does something well and makes money, other players will enter and cut into their market.

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.

The Coca-Cola Company and 3M are Motley Fool Inside Value recommendations. Suntech Power Holdings is a Motley Fool Rule Breakers recommendation. Try either Foolish newsletter 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 here. The Motley Fool has a disclosure policy.