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kelpie

or kelpy

noun pl. kelpies

Celt. Folklore a water spirit, supposed to take the form of a horse and drown people

noun

any of a breed of medium-sized sheepdog with erect ears, a pointed muzzle, and a thick coat of black, tan, red, etc.: first bred in Australia from the collie and wild dingo

See kelpie in American Heritage Dictionary 4

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