First purchase

I bought 1000 shares in RCG Holdings Group (RCG:LSE) on the 26th of September for 67p per share (62% of their 52-week high point). This is an RFID and biometrics company with a wide product portfolio and huge growth in China. Without going into all the numbers it's a succesful company which is consistently beating expectations but despite this it trades on low P/E ratio of less than 4. This is perhaps due to general market pessimism and also due to the concerns about governance.

The main concerns around the company are related to ownership (27.6% owned by an estate where the will is being disputed), inconsistent dividend and share buy-back policies and the Bermuda registration which side-steps some regulations. A financial down-turn in China could have a heavy impact on the company, however it is not reliant on a single market.

On the upside, the company is delivering positive results, has excellent growth prospects (20% overall market growth is helping the company expand) and profit margins are great. Additionally RCG is about to dual list on the Hong Kong exchange which will bring in stricter governance requirement and thus make the company more attractive to institutional investors.

One of the drawbacks with it's current AIM-listing in London is that 1000 shares is the maximum Buy amount available which drives up transaction cost to about 2%. From a risk exposure point of view I'm looking at a holding of a maximum 5000 shares (25% of portfolio), so potentially I'm making 4 more buys of this share over the coming months.