This article is from the Llamas & Alpacas FAQ, by Michael Shealy and William Bagwell with numerous contributions by others.
Llamas have been used very successfully as guard animals for sheep, goats, and miniature horses. They are very intelligent and curious, and have the ability to recognize family pets, neighbors' pets, and the difference between them and coyotes. Their curious nature and athletic ability bring them into close proximity to the coyote, causing the coyote to turn tail. Gelded males are preferred as guard animals. They work best without other llamas, in this case, adopting the herd of sheep (goats, miniature horses, cattle) as their "own" herd.
 
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