<> ACTUALLY THE EASIEST WAY TO THINK ABOUT IT. sell side says est rtn = 10% you do CAPM and get 12% you got a higher discount rate than bob over at goldman. We know that higher disct rates = lower stock price, so the higher CAPM derived rate pulls the stock down b/c it was overpriced. thus, if CAPM > sell side estimates, the stock is overpriced and under the SML and you short it to create alpha.