Greenlight Cites Sheen, Neologism To Explain Bad Q1

May 2 2011 | 1:18pm ET

Distraction can be useful when you've got bad news to report. So quickly after telling investors that its hedge funds had lost between 2.5% and 3.2% in the first quarter, Greenlight Capital turned its attention to Charlie Sheen.

"Much like" the former television star, "who seems to believe that all publicity is good publicity, recent market behavior suggests that we are in the part of the cycle where 'all news is good news,'" the hedge fund wrote to investors in a letter obtained by

"'All news is good news' was also true for individual stocks, including a number of our shorts," which tanked to the tune of 9.2% on the quarter. "We expect to take some lumps when our shorts release strong earnings and their stock prices rise accordingly. Yet, this quarter we were repeatedly confuzzled [sic] when we read company news announcements that we expected to cause falling stock prices, only to see them rise instead—and sometimes sharply at that."

The quarter has Greenlight all but throwing up its hands.

"We believe that this environment is cyclical, and that it will continue this way… until it doesn't," the firm said. And, "since we don't expect to be able to call the turn, we believe our best course is to concentrate on generating better alpha."

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