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Data Domain Inc.'s (DDUP) largest institutional shareholder doesn't expect NetApp Inc. (NTAP) will top EMC Corp.'s (EMC) offer for the company, and has reduced its stock holdings following the latest bid.

"Post EMC's most recent $33.50 offer, we have chosen to reduce our position considerably," Artis Capital Management President Stuart Peterson told Dow Jones Newswires in an e-mail. "Given their limited domestic cash levels relative to EMC and the dilutive effect of an increased stock component, we believe [NetApp] management is unlikely to move their bid higher."

Artis Capital, a San Francisco-based hedge fund manager, held 10.62% of Data Domain's outstanding shares as of June 4, according to Factset Research.

Data Domain shares were recently down 15 cents, or 0.4%, to $33.91.

This was the firm's first public statement regarding the bidding war underway between EMC and NetApp for Data Domain, which makes a data-storage technology that helps to reduce duplicate information in company data centers.

On Monday, EMC raised its offer for Data Domain by 11% to $2.2 billion, or $33.50 a share, up from last month's bid of $30. Hopkinton, Mass.-based EMC stepped in after Data Domain agreed to a cash-and-stock offer of $25 a share from NetApp. Then Data Domain subsequently agreed to a higher price of $30 from NetApp to match the EMC bid.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com