$cdmaterials
$cdmaterials is a QC command available in all 
Source games.
(only in )
It defines the folders in which the game will search for the model's materials (subfolders are not searched). Each path is relative to <game>\materials\.
It is traditional to specify the \models subfolder before any others, to prevent the materials from appearing in Hammer.
Tip:Material filenames are defined by the reference mesh ($body or $model).Tip:By default, models can have no more than 32 different material search paths.
Confirm:It appears that if this parameter is null ($cdmaterials ""), then the full file path is written from SMD files. This behavior can be observed in the version of Propper that is integrated into Hammer++.Syntax
$cdmaterials <path> <path 2> [...]
Example
$modelname "weapons\shell.mdl" $cdmaterials "models\weapons\" $body shell "shell_ref.smd" $sequence idle "shell_idle.smd"
