For the benefit of FB, the difference between trivial buying and serious buying is:
1) for an individual relates to their relativity scale (I regard placing a share-buying order of less than $10K as being trivial, but this differ from person to person); and
2) at the aggregate level, the variance from the average shares traded per trading day.
On point 2, TGA trades about 250,000 shares on a trading day, and for about 90% of the trading days, the number of shares traded would be less than 500,000. Consequently, the near-600,000 shares (594,687) traded on 27/08/2014 made the title “serious trading today” apt for the day. Compared to 27/08/2014, the number of days when an equal or greater number of shares went through between 30/09/2013 and 26/09/2014 was 14 out of 251 trading days, or 5.5%.
Somebody queried why I wrote that BYL's full order book should allow it to be more selective in chasing contracts. There are three concepts at play: optimum fleet size; the time it takes for an enterprise to scale up without getting indigestion; and opportunity cost.
On fleet size, one of the problems that have caused NWH (NRW Holdings), BLY (Boart Longyear) and other companies in the mining services sector much strife is that in boom times they expanded their equipment fleets, and in recent years they have struggled to keep the equipment employed, and to handle lease payments for idle equipment. The lesson is, that if one is in a capital intensive business, it is unwise to grab every job in the offing, and invest in the equipment to handle it. One could hire equipment, but that tends to cost more than the cost of reasonably well utilised in-house equipment.
On the matter of staffing, one only has to have looked at BYL's webpage to notice that it is struggling to find the people it now requires, and it must also adapt its management capability to handle the increased complexity that size occasions. Companies that expand too quickly often suffer serious reversals of fortune. There are many well researched papers on this matter, and all conclude that there is an optimal growth for all companies. For BYL to grow by more than 20% in a year may transpire to be suboptimal.
If firm is constrained to grow its revenue by the equipment and staffing issues already mentioned, then management should recognise that it can only take on X amount of new business, and if they cram low-margin business into X, they would have to walk away from more profitable business. In the parlance of economists, the opportunity cost of low-margin business is the more profitable business one has to reject for the want of capacity to handle it.
