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We demonstrate a Monte Carlo algorithm for efficiently simulating ferrofluids. By identifying particle clusters and evolving them as single units, we reduce correlation times by more than two orders of magnitude. This method enables accurate calculations of ferrofluid thermodynamics in the limit of strong magnetic coupling that would be impossible by conventional means. We apply the method to study magnetic anisotropy in dilute thin films. ͓S1063-651X͑99͒05702-5͔

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