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. 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 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 called them.


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CAPS Rating
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Hovnanian (NYSE:HOV)





Macy's (NYSE:M)





Duke Energy (NYSE:DUK)





Best Buy (NYSE:BBY)





Deere (NYSE:DE)



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 a launching pad for further research.

Underdogs still wag their tails
The picture of vast solar farms catching the sun's rays has never held much attraction for me, even if it meant reducing our dependence on foreign sources of fossil fuels. It seems like a huge waste of space to devote otherwise wild lands to thousands of solar panels.

Duke Energy is looking to minimize such an ugly scar torn across the landscape: It's leasing rooftops from homeowners and businesses already built and installing solar panels on them. While the utility still plans to buy some 16 megawatts of power from solar farms, it's also testing the rooftop initiative to see what sort of cost savings can be generated. Additionally, it's teaming up with Wal-Mart Stores (NYSE:WMT), who will use wind power to power some stores.

This movement toward alternative sources of energy leads CAPS member KittyLitterClump to believe that Duke is simply not willing to stand still and let others take the initiative:

Duke Energy has taken a beating. Probably too big of a beating considering it is a major provider of electric and gas. Looking toward the future, Duke Energy is investing and/or purchasing solar photovoltaic power and wind power. Whether wind or solar actually becomes a bigger player or not, at least Duke isn't standing around to see what happens. This stock doesn't deserve the massive beating it has taken.

An enriching investment
The retail landscape is undergoing a sea change these days as consumer spending stalls. Retailers are expected to report a 1.1% decline in comps for the holiday season, making it one of the worst results in decades. As a result, analysts are expecting a wave of bankruptcies to hit retailers, possibly spreading across other industries. Some supporting companies, like trucking company YRC Worldwide  (NASDAQ:YRCW), are being closely watched for signs of doom and gloom. Venerable department store Macy's has also looked like it's been on its deathbed for a while, and certainly the news that it is shuttering 11 stores nationwide does nothing to dispel the notion.

Top-rated CAPS All-Star aguadaboca writes that Macy's problems stem from the overexpansion that's occurred in the past, with too many malls and too many stores sapping their strength:

I just dont get it!This is a wonderful opportunity,missed it last time I looked! The RED INK is going to fly.Only NYC with their tourists will come close to plan, the branches will fail miserably and it won't take long to show.The dividend will go down or be eliminated for the factors to ship new goods to them after the unexpected losses they will sustain the next two quarters, result in agency credit watch on their debt.The US continues to be overstored and has excess shopping malls just because consumers in the past have levered their buying habits to an excess of personal income. They are well aware of this finally and will spend wiser and seek to reduce their deby levels.The next two years will eliminate over 20% of retailers!And those existing will have to compete with inventory "givaways" by others.

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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YRC Worldwide is a Motley Fool Hidden Gems Pay Dirt selection. Duke Energy is an Income Investor pick. Wal-Mart Stores and Best Buy are Inside Value selections. Best Buy is a Stock Advisor pick. The Fool owns shares of Best Buy.

Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.