This fund manager is still backing Sigma Healthcare Ltd

Shares in pharmaceutical wholesale and distribution company Sigma Healthcare Ltd (ASX: SIG) continue a downward trend, with Sigma at 87c per share at the time of writing, down from $1.17 at this time last year.

There are several factors that could be impacting the Sigma share price slide, including the company’s recent legal dispute with Chemist Warehouse and some plateaued earnings growth in the pharmaceutical industry as whole.

The legal debacle is now settled, but Chemist Warehouse’s contract renewal intentions with Sigma are unclear.

With Chemist Warehouse accounting for 37% of the company’s revenue, the contract loss would be a major hit for the pharmacy-led network.

But despite the grey outlook, notable investors have recently been active in the Sigma Healthcare register – investment company The Vanguard Group Inc reported a significant shareholding in December 2017 and privately-owned investment management company Allan Gray Australia steadily increased its already significant holdings by more than 74 million shares throughout the 2017 calendar year.

Sigma is due to release its full year results this month, which will hopefully meet guidance, confirm the dividend expected to reward its shareholders in April and give investors more certainty about its future.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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