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By Svea Herbst-Bayliss
BOSTON, July 29 Hedge fund Elliott Management told investors that it added to its stake in Juniper Networks last quarter and sees opportunities in real estate securities in Europe, but it said little about two positions making headlines - Argentina and EMC Corp.
During the first half of 2014, the Elliott Associates portfolio gained 4.6 percent while the Elliott International Limited fund rose 4.1 percent, the $25 billion firm, which is run by investor Paul Singer, wrote in a letter dated July 28, a copy of which was obtained by Reuters on Tuesday.
Writing about Juniper Networks, the firm said: "We added to our position during the quarter, as we continue to believe that Juniper has numerous pathways for value maximization." He did not say how large the stake is.
In the letter, the firm said it sees opportunities in non-performing loans, especially in Italy, in part because the "Bank of Italy has been requiring banks to improve their NPL provisioning levels." Elliott also cited opportunities in European real estate markets, particularly in the UK and Germany, even as more competitors are piling in and making the broader market more competitive.
Elliott, which has been pursuing activist strategies at some companies, confirmed in the letter that it owns a stake in storage systems company EMC, which is the majority owner of VMware Inc. Earlier this month speculation mounted about EMC's future and that Elliott, which people close to the firm said had taken a $1 billion stake, might push for a breakup. The firm did not say how large its stake is.
In the letter, the firm simply said: "Elliott is looking forward to a dialogue with EMC to discuss ways to create additional value for shareholders." It did not shed any light on which options it might pursue or whether suitors may be waiting in the wings.
Elliott, whose NML Capital Ltd affiliate is one of the lead holdout creditors of Argentina, was similarly tight-lipped in discussing its long-running battle with Argentina. Elliott had refused debt swaps after the country defaulted more than a decade ago and remains a holdout for full payment. In its letter, dated July 28, it said the country must now decide whether to default on its external debt.
"With only two days left (as of this writing) for Argentina to make that decision, the situation is fluid, and Elliott is limited in what we can say," the letter said.
"The path forward is uncertain. No matter what happens, thousands of bondholders, including Elliott, will continue to pursue our rights, attempting to generate a rational discussion with someone on the other side and trying to forge a solution," the firm added.
A bond payment by Argentina is due on Wednesday. If Argentina and the holdout creditors do not reach a deal by Wednesday and the holdouts do not ask the U.S. judge overseeing the case to suspend a ruling to pay them in full, the judge will prevent Argentina from making the scheduled bond payment.
More generally, Elliott, whose pronouncements on economic policies and investment decisions are closely followed, again lashed out at central bankers' easy money policies and warned of potential problems ahead.
"We believe that current global monetary policy is extremely dangerous, the financial system is still over leveraged and opaque, major financial institutions are still essentially dependent on government guarantees to protect them in the event that there is a renewed financial crisis, and an abrupt shake-up could occur at any time," the firm wrote. (Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)