REUTERS/Steve Marcus

Stocks could fall 50% from February highs, Elliott Management wrote in a Wednesday letter to clients, Reuters reported Thursday.

That forecast implies a 39% decline from current levels as investors sort through the economic wreckage of the coronavirus pandemic.

Though Elliott has bought some stocks and bonds, it said in the letter that "there does not appear to be a gilded cornucopia of shining bargains," Reuters reported.

Read more on Business Insider.

The market rout induced by the coronavirus pandemic is far from over, according to Elliott Management, the activist hedge-fund firm led by the billionaire investor Paul Singer.

Stocks could fall 50% from February highs, the hedge fund wrote in a Wednesday letter to clients. That would imply a roughly 39% drop from current levels. Reuters first reported the contents of the letter on Thursday.

"Our gut tells us that a 50% or deeper decline from the February top might be the ultimate path of global stock markets," the letter said, according to Reuters.

Elliott said in the letter that the benchmark S&P 500 tumbled as much as 36% over a four-week period, which "provided a heavy bookend to a dozen years of basically nonstop positive returns in global stocks, bonds and real estate."

The firm also mentioned that the 31% rally from March lows left the S&P 500 still 16% below its February high. Against this backdrop, Elliott has bought some stocks and bonds but has struggled overall to find attractively priced opportunities, it said.

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"There does not appear to be a gilded cornucopia of shining bargains," the letter said.

The firm is reacting to market whiplash driven by uncertainty about the ultimate impact of the coronavirus pandemic. As of Thursday, there were more than 2 million confirmed cases of COVID-19 in the world, and more than 134,000 people have died.

Data in the US and elsewhere has shown that the outbreak and strict lockdowns to curb the spread of the disease have had a dire impact on the global economy. A recession is now a foregone conclusion of most economists.

Elliott Management, which is based in New York and controls $40.4 billion in assets, is known for its pessimistic economic views and ability to get ahead of looming downturns, Reuters said. The Elliott International fund gained 2.2% in the first quarter, while its Elliott Associates fund was up 1.6%, the report said.

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