“Small Companies Profiting From Covid-19 Pivots”
Buffalo Small Cap Fund co-portfolio managers Bob Male, CFA, and Jamie Cuellar, CFA, were recently interviewed by Barron’s about small-cap companies using size to their advantage, by pivoting their business models to cater to life amidst the COVID-19 pandemic.
“When sales improve, their earnings accelerate much more quickly than large caps.“ ~ Bob Male, CFA
The team also discusses several companies in the BUFSX/BUISX portfolio that have found innovative ways to shift their business models over the last several months and are now well positioned to benefit from the changing needs of companies, consumers, and society:
- Quidel – QDEL
- Pluralsight – PS
- Lovesac – LOVE
While headlines focus on a half-dozen mega-cap disruptors, many smaller companies have used size to their advantage –– pivoting their businesses to cater to life in the world of Covid-19.
– Jamie Cuellar, Alex Hancock, Bob Male
Diversification does not assure a profit, nor does it protect against a loss in a declining market. Past performance does not guarantee future results. Earnings growth is not representative of the fund’s future performance. Cash flow is a measure of the cash produced by the firm in a given period on behalf of equity holders. The true measure of the value of a firm’s equity is considered to be the present value of all free cash flows.
Opinions expressed are those of the author or Funds and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice. References to other mutual funds should not to be considered an offer to buy or sell these securities. As of 3/31/20 the Buffalo Small Cap Fund held Quidel 2.46%, Pluralsight 1.32%, and Lovesac 0.79%. A complete list of the Fund’s holdings can be found here. Fund holdings are subject to change and should not be considered a recommendation to buy or sell any security.
Annualized Performance (%)
|As of 6/30/20||3 MO||YTD||1 YR||3 YR||5 YR||10 YR||15 YR||20 YR||Since Inception|
|BUFFALO SMALL CAP FUND - Investor||43.88||15.23||25.26||18.61||13.69||13.71||9.75||11.15||12.34|
|BUFFALO SMALL CAP FUND - Institutional||44.02||15.36||25.49||18.80||13.87||13.89||9.92||11.32||12.51|
|Morningstar U.S. Small Growth Index||32.84||4.35||8.79||11.67||9.51||14.09||9.47||5.06||6.34|
|Lipper Small Cap Growth Fund Index||34.39||1.87||6.40||12.86||9.67||13.49||8.75||5.45||7.20|
|Morningstar Small Growth Category||32.19||-0.10||4.46||10.08||8.28||12.94||8.85||7.00||7.29|
The expense ratio for BUISX is 0.87% and 1.02% for BUFSX. Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower of higher than the performance quoted and can be found here; quarter-end performance can be found here. Performance is annualized for periods greater than 1 year.
Jamie Cuellar, Buffalo Small Cap Fund co-portfolio manager, recently appeared on the Money Life with Chuck Jaffe podcast, discussing his investment viewpoints and portfolio strategy.
U.S. small cap stocks posted solid performance in 2019 but lagged behind the S&P 500 Index, marking 3 years in a row of underperformance versus large cap stocks.