Is it time to cash in on Sigma shares?

Shares have extended after the Chemist Warehouse merger.

| More on:
Two lab workers fist pump each other.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

For those who've owned Sigma Healthcare Ltd (ASX: SIG) shares this year, it's been a joyful ride.

Shares in the ASX healthcare stock are up more than 148% this year to date on the back of the planned merger with Chemist Warehouse.

Sigma shares surged nearly 40% shortly after the Australian Competition and Consumer Commission (ACCC) approved the deal.

But with such a rally comes significant profits for those holding large stakes in the company.

According to ASX filings this week, HMC Capital Ltd (ASX: HMC) has completed a large sell-down in its Sigma position.

This raises the question of whether now is a prime opportunity to cash in. Let's take a closer look.

Why is HMC Capital offloading Sigma shares?

The Sigma–Chemist Warehouse deal was approved on 7 November after a lengthy review process that examined potential anti-competition impacts.

Completed via a backdoor listing, the deal saw the pair merge to create a healthcare giant that, according to the ACCC, was "unlikely to substantially lessen competition".

Sigma shares exploded higher on the news. And while plenty of investors were buying for the near-term gains, some shareholders were downsizing their positions.

HMC Capital immediately sold down its stake in Sigma, dropping its holdings from 10.64% to 8.24% on the same day as the ACCC's decision.

The asset manager's reduction in Sigma shares has been ongoing, starting back in April when it sold approximately 4% of its holdings.

HMC initially bought into Sigma at around 70 cents per share in 2022, according to The Australian, making its recent sales an exit at a solid profit.

The financial services company isn't exiting Sigma completely, however. It is just reducing its holdings.

Still, brokers are cautious about what's next. According to CommSec, consensus rates the stock a 'moderate' sell.

This comprises three sell ratings, four holds, and one broker still advising to buy Sigma shares.

Where is HMC Capital now investing?

Where or how HMC will use the funds generated from the sell-downs isn't clear. But elsewhere, the company is channelling its resources into the digital infrastructure space.

In a separate update, the company announced it acquired the iSeek data centre platform in Australia for $400 million. It marks the foundation of its planned DigiCo digital infrastructure platform.

The acquisition, alongside others, could form the basis of a future ASX-listed property trust:

These acquisitions will seed an ASX-listed DigiCo Infrastructure REIT (DigiCo REIT)
2 with [over $4 billion] of [assets under management] AUM…

… Once it is established, it is proposed that DigiCo REIT will be a stapled entity consisting of a company and a registered managed investment scheme. Shares in the company will be stapled to units in the managed investment scheme on a one for one basis to form stapled securities.

Foolish takeaway

Sigma shares are in the limelight after the ACCC approved its merger with Chemist Warehouse this month.

Where to from here is a matter of economic debate, but also the fundamentals of both companies.

Sigma shares are up more than 267% in the past year.

Should you invest $1,000 in Hmc Capital right now?

Before you buy Hmc Capital shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Hmc Capital wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

A group of people in a corporate setting do a collective high five.
Healthcare Shares

Sigma share price up 9% on first day of trading post-merger with Chemist Warehouse

It's a post-merger party for Sigma Healthcare shareholders today.

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Up 135% in a year, why this ASX 200 healthcare stock is 'on track to become a truly great Australian success'

A leading fund manager expects more strong performance from this surging ASX 200 healthcare stock.

Read more »

Stethoscope with a piggy bank in the middle.
Healthcare Shares

With revenue up 9%, why does the NIB share price keep falling?

Will the ailing share price make a full recovery?

Read more »

Six smiling health workers pose for a selfie.
Healthcare Shares

Guess how much $5,000 invested in Sigma shares in December 2023 is worth now!

Sigma shares have soared over the past year alongside the merger with Chemist Warehouse.

Read more »

Woman with headphones on relaxing and looking at her phone happily.
Healthcare Shares

Everything you need to know about the latest CSL dividend

CSL's latest dividend should be turning investors' heads...

Read more »

thoughtful investor sitting at computer
Healthcare Shares

What are brokers saying about CSL shares after the selloff?

The biotech giant's shares hit a 52-week low yesterday. Is this a buying opportunity?

Read more »

A man looking at his laptop and thinking.
Earnings Results

CSL shares push higher despite 'mixed result with headline misses'

There were positives and negatives in the company's first half performance.

Read more »

Scientists working in the laboratory and examining results.
Earnings Results

CSL share price on watch amid $2.1b half year profit and dividend hike

Let's see how this biotech giant performed during the first half of FY 2025.

Read more »