Quick Facts
Investor Institutional
Daily Pricing:  
As of 11/27/2023  
NAV: $21.82 $22.00
$ Change: $-0.05 $-0.04
% Change:
-0.23% -0.18%
13.06% 13.23%
Inception Date: 4/16/2001 7/1/2019
Expense Ratio: 1.01% 0.86%
Total Net Assets: $787.07 Million  (9/30/23)
Morningstar Category: Mid Cap Growth
Benchmark Index: Russell Midcap Growth
Related Material:
   Fund Fact Sheet Q3 2023
   PM Commentary Q3 2023
   Portfolio Manager Q&A

The investment objective of the Buffalo Discovery Fund is long-term growth of capital.

The Fund managers seek to identify companies expected to benefit from innovation and experience growth based on the identification of long-term, measurable secular trends, and which, as a result, the managers believe may have potential revenue growth in excess of the gross domestic product growth rate.

Companies engaged in innovative strategies are those who, in the Fund managers’ opinion, are engaged in the pursuit and practical application of knowledge to discover, develop, and commercialize products, services, or intellectual property.

Companies are screened using in-depth, in-house research to identify those which the Fund managers believe have favorable attributes, including attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.


To us, innovation means to discover and transform new ideas into meaningful commercial value. The greater the economic impact and the longer the staying power, the better.

We seek under-appreciated stock opportunities in companies where thoughtful management teams are in a favorable position to use innovation for market advantage and sustained shareholder value creation.

Dave Carlsen, CFA, Portfolio Manager

Morningstar Ratings


Overall Morningstar Rating™ of BUFTX based on risk-adjusted returns among 521 Midcap Growth funds as of 10/31/23.

Morningstar Sustainability Rating™ of BUFTX out of 1,599 U.S. Equity Mid Cap funds as of 8/31/23, based on 100% of AUM

Carbon Metric Rating of BUFTX as of 8/31/23 in the Mid Cap Growth category, based on 99% of AUM; long positions only


Historical Sustainability Score Rank of BUFTX

Performance (%)

As of 10/31/233 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor-13.691.550.50-0.446.068.1012.819.498.24
BUFFALO DISCOVERY FUND - Institutional-13.641.700.65-
  Russell Midcap Growth Index-12.704.283.350.798.099.0912.719.348.38
As of 9/30/233 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor-6.208.1914.781.085.089.0111.6710.368.58
BUFFALO DISCOVERY FUND - Institutional-6.158.3414.951.235.259.1811.8410.538.74
  Russell Midcap Growth Index-5.229.8817.472.616.979.9411.2510.058.67

BUFFALO DISCOVERY FUND - Investor36.6110.685.645.5625.44-6.5431.6333.8111.90-28.67
BUFFALO DISCOVERY FUND - Institutional36.8210.855.805.7225.62-6.4031.8234.0312.07-28.57
  Russell Midcap Growth Index35.7411.90-0.207.3325.27-4.7535.4735.5912.73-26.72
  Morningstar U.S. Mid Growth Index34.079.77-0.716.4625.67-3.1636.0146.1714.97-32.37
For performance prior to 7/1/19 (Inception Date of Institutional Class), performance of the Investor Class shares is used and includes expenses not applicable and lower than those of Investor Class shares. 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 obtained here. Performance is annualized for periods greater than 1 year. Each Morningstar category average represents a universe of funds with similar objectives.
3 Year Risk Metrics
BUFTX vs Russell Midcap Growth Index (As of 9/30/23)
Upside Capture97.94
Downside Capture102.60
Sharpe Ratio-0.03
Hypothetical Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the Inception Date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.


Portfolio Characteristics
(As of 9/30/23) 
# of Holdings82
Median Market Cap$21.86 B
Weighted Average Market Cap$30.72 B
3-Yr Annualized Turnover Ratio37.45%
% of Holdings with Free Cash Flow86.59%
Active Share75.30%
Top 10 Holdings
HoldingTickerSector% of Net
IQVIA Holdings IncIQVHealth Care2.51
MSCI Inc. Class AMSCIFinancials2.50
DoubleVerify Holdings, Inc.DVInformation Technology2.29
Copart, Inc.CPRTIndustrials2.19
CoStar Group, Inc.CSGPIndustrials2.01
Martin Marietta Materials, Inc.MLMMaterials2.01
AMETEK, Inc.AMEIndustrials1.93
Ingersoll Rand Inc.IRIndustrials1.88
Boston Scientific CorporationBSXHealth Care1.88
Verisk Analytics IncVRSKIndustrials1.87
As of 6/30/23. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Sector Weighting

As of 9/30/23. Security weightings are subject to change and are not recommendations to buy or sell any securities. Sector Allocation may not equal 100% due to rounding.

Market Capitalization

As of 9/30/23. Market Cap percentages may not equal 100% due to rounding.


Dave Carlsen, CFA
Portfolio Manager

31 Years of Experience

 View full bio



(As of 9/30/23) — The Buffalo Discovery Fund declined 6.20% for the quarter versus a decline of
5.22% for the Russell Midcap Growth Index. Outperformance in the healthcare and
technology sectors was offset by underperformance from our energy-related holdings.
Companies involved in clean energy and the construction of power transmission
systems accounted for some of the fund’s worst performers, while our underweight
in traditional oil & gas producers was a headwind with crude prices rising nearly 30%.
The rise in crude prices came on the heels of an OPEC production cut at a time when
the country has record-low levels of inventory in the Strategic Petroleum Reserve. Our
focus on innovative growth companies generally keeps us out of cyclical commodity
investments such as oil exploration and refining.

Beyond the energy sector, stocks were broadly weaker with rising interest rates
weighing on equity valuations and investors mulling the mounting headwinds for
consumer spending. Defensive sectors—consumer staples, healthcare, and utilities
—have now underperformed for two consecutive quarters. This recent weakness
appears due to unique issues, however, and not a broader rotation into cyclicals.
Within healthcare, rising interest rates and an uncertain regulatory environment are
serving to push up the cost of capital for biotech and pharmaceutical investments.
There are also long-term concerns around the impact of new weight-loss drugs on
companies that treat diabetes and obesity. Within consumer staples, stocks traded
lower on reports of weaker grocery volumes and shoppers trading down to private
label products.

Top Contributors
Splunk, Inc. (SPLK) was the largest contributor to performance during the quarter.
Splunk provides security and observability solutions, enabling companies to have
greater control and insight into their data and digital operations. Cisco announced it
would acquire the company for $30 billion, or $157/share, on September 21. Splunk
agreed not to solicit other proposals and to pay Cisco a $1 billion termination fee if it
chooses to accept a rival offer (although no competing offers are currently on the table).
We believe the offer from Cisco is fair and expect the deal to close.
Global Payments (GPN) was another top contributor for the quarter. Global Payments
provides payments technology and transaction processing for merchants, as well
as software tools and solutions for card issuers. The company surprised investors
with second quarter revenue and earnings above expectations. Merchant payment
volume growth outpaced peers, assuaging any concerns about its competitive position.
Management also raised the low end of its 2023 guidance ranges for revenue and
earnings per share, citing a generally stable macro environment. Looking forward, the
company should continue to benefit from the ongoing global shift from cash to credit
and debit payments.

Top Detractors
Double Verify (DV) was the top detractor for the quarter. The company is a leading
software platform for digital media measurement and analytics. Investors had grown
increasingly bullish on the stock following the announcement that Meta Platforms – the
parent company of Instagram and Facebook – would allow Double Verify to deploy its
audience measurement and brand safety tools within its News Feed and Reels products.
Online ad spending was rebounding, as well, with the industry lapping changes to Apple’s
consumer privacy policies. Shares had soared 90% year-to-date into the release of second
quarter results. The quarter, however, was simply in line with guidance with revenue rising
22%. Management suggested that recent enterprise account wins would have longer
implementation lead times, and that brought down expectations for the third quarter.
We continue to own shares of the company and believe it is executing well, bringing in
new clients and expanding its product portfolio in digital media verticals such as social,
streaming video, and retail. We expect 20%-plus growth will continue as consumer
mindshare shifts from traditional media outlets to online platforms, and marketers are
increasingly demanding independent analysis of advertising return on investment and
brand safety.
MasTec, Inc. (MTZ) was also a detractor during the quarter. MasTec is an infrastructure
construction company serving the communications, clean energy, power transportation,
and oil & gas industries. The company reduced its revenue guidance for 2023, citing
slower deployment of 5G networks and project delays in its power transmission and clean
energy businesses. Some of the project delays were related to IEP, a company it acquired
less than a year ago. This has investors questioning the depth of management’s diligence
on the deal. We acknowledge the near-term shortfall but expect revenue growth tied to
clean energy and broadband to reaccelerate in 2024. We believe valuation is compelling
at current levels.


(As of 9/30/23) — Despite the recent market pullback, equities have generally performed well year to date, aided by resilient consumer spending and moderating inflationary pressures.
Employment growth has not wavered despite tighter monetary policy, allowing the
Fed to focus entirely on inflation within its dual mandate of price stability and full
employment. Fed Chairman Powell has indicated that one more rate hike is possible
this year, but interest rates are sufficiently restrictive to get the job done over time.
The most concerning issues today include the ongoing dysfunction in Washington and
the government’s lack of fiscal discipline. The U.S. is looking to issue $2 trillion in debt
to finance next year’s budget deficit. The combination of tight labor markets, the Fed’s
quantitative tightening, and a rising debt-to-GDP ratio could push long-term rates even
higher than current levels. The sharp move in rates increases the risk that something
in the economy breaks and we end up in a hard recession. Industries that require
financing are already under pressure, including housing and big-ticket durables. We
continue to expect cautious guidance from most companies this earnings season.
Against this backdrop, our strategy continues to focus on our favorite innovative
growth companies with a heightened awareness of potential cyclical risks. We are
investing in industry-leading franchises with strong balance sheets, scalable business
models, and wide competitive moats. This long-term, risk-aware view has served us
well and we believe it will lead to a continued compounding of attractive returns over
time. Thank you for your continued trust and support.

The opinions expressed are those of the Portfolio Manager(s) and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Investing in both actively and passively managed mutual funds involves risk and principal loss is possible. Earnings growth is not representative of the fund’s future performance.

7 Buffalo Funds Named to IBD Best Mutual Funds 2021 List

Seven Buffalo Funds were named to Investor’s Business Daily Best Mutual Funds 2021 list, including the Best U.S. Diversified, Growth, Large Cap, Mid Cap, Small Cap, International, and U.S. Taxable Bond Fund categories.


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Retirement Information
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Fundamental Approach

We get to know the companies we invest in and learn how they run their business.

Top-Down & Bottom-Up

We identify Top-Down broad, secular growth trends and search for companies from the Bottom-Up.

Proprietary Philosophy

We construct our portfolios based on our own proprietary investment strategy.

Disciplined Investing

Sticking to our disciplined investment strategy ensures we maintain a consistent, balanced approach.

Morningstar Rating™

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

©2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Buffalo Discovery Fund (BUFTX) received 3 stars among 521 for the 3-year, 3 stars among 493 for the 5-year, and 3 stars among 396 Mid-Cap Growth funds for the 10-year period ending 10/31/23. Other share classes may have different performance characteristics.

Morningstar Sustainability Rating™

The Morningstar Sustainability Rating™ is intended to measure how well the issuing companies of the securities within a fund’s portfolio holdings are managing their financially material environmental, social and governance, or ESG, risks relative to the fund’s Morningstar Global Category peers. The Morningstar Sustainability Rating calculation is a five -step process. First, each fund with at least 67% of assets covered by a company-level ESG Risk Score from Sustainalytics receives a Morningstar Portfolio Sustainability Score. The Morningstar Portfolio Sustainability Score is an asset weighted average of company-level ESG Risk Scores. The Portfolio Sustainability Score ranges between 0 to 100, with a higher score indicating that a fund has, on average, more of its assets invested in companies with high ESG Risk. Second, the Historical Sustainability Score is an exponential weighted moving average of the Portfolio Sustainability Scores over the past 12 months. The process rescales the current Portfolio Sustainability Score to reflect the consistency of the scores. The Historical Sustainability Score ranges between 0 to 100, with a higher score indicating that a fund has, on average, more of its assets invested in companies with high ESG Risk, on a consistent historical basis. Third, the Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Global Categories in which at least thirty (30) funds receive a Historical Sustainability Score and is determined by each fund’s Morningstar Sustainability Rating Score rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). Fourth, Morningstar applies a 1% rating buffer from the previous month to increase rating stability. This means a fund must move 1% beyond the rating breakpoint to change ratings. Fifth, they adjust downward positive Sustainability Ratings to funds with high ESG Risk scores. The logic is as follows: If Portfolio Sustainability score is above 40, then the fund receives a Low Sustainability Rating. If Portfolio Sustainability score is above 35 and preliminary rating is Average or better, then the fund is downgraded to Below Average. If the Portfolio Sustainability score is above 30 and preliminary rating is Above Average, then the fund is downgraded to Average. If the Portfolio Sustainability score is below 30, then no adjustment is made. The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. Since a Sustainability Rating is assigned to all funds that meet the above criteria, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. The Portfolio Sustainability Score is calculated when Morningstar receives a new portfolio. Then, the Historical Sustainability Score and the Sustainability Rating is calculated one month and six business days after the reported as-of date of the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics’ ESG scores from the same month as the portfolio as-of date. Please click on http://corporate1.morningstar.com/SustainableInvesting/ for more detailed information about the Morningstar Sustainability Rating methodology and calculation frequency. Sustainalytics is an independent ESG and corporate governance research, ratings, and analysis firm. Morningstar, Inc. holds a non-controlling ownership interest in Sustainalytics.

Morningstar Low Carbon Designation™

The Morningstar® Low Carbon Designation™ is intended to allow investors to easily identify low-carbon funds across the global universe. The designation is an indicator that the companies held in a portfolio are in general alignment with the transition to a low-carbon economy. The designation is given to portfolios that have low carbon-risk scores and low levels of exposure to fossil fuels. To determine carbon-risk scores and fossil fuel involvement, Morningstar uses Sustainalytics' company-level data. The Morningstar® Portfolio Carbon Risk Score™ measures the risk that companies in a portfolio face from the transition to a low-carbon economy. The Morningstar® Portfolio Fossil Fuel Involvement™ percentage assesses the degree to which a portfolio is exposed to thermal coal extraction and power generation as well as oil and gas production, power generation, and products & services. To receive a Morningstar Portfolio Carbon Risk Score, at least 67% of portfolio assets must have a carbon-risk rating from Sustainalytics. The percentage of assets covered is rescaled to 100% before calculating the score. To receive the designation, a portfolio must meet two criteria: 1) a 12-month trailing average Morningstar Portfolio Carbon Risk Score below 10 and 2) a 12-month trailing average exposure to fossil fuels less than 7% of assets, which is approximately a 33% underweighting to the global equity universe. Funds receive the Low Carbon designation based on the most recent quarterly calculations of their 12- month trailing average Morningstar Portfolio Carbon Risk Scores and Morningstar Portfolio Fossil Fuel Involvement. Funds holding the Low Carbon designation that no longer meet the criteria will not receive the designation for the subsequent quarter. All Morningstar Portfolio Carbon Metrics, including the Morningstar Portfolio Carbon Risk Score, Morningstar Portfolio Fossil Fuel Involvement, and the Morningstar Low Carbon Designation, are calculated quarterly. Please visit http://corporate1.morningstar.com/SustainableInvesting/ for more detail information about the Morningstar Low Carbon Designation and its calculation. Sustainalytics is an independent ESG and corporate governance research, ratings, and analysis firm. Morningstar, Inc. holds a non-controlling ownership interest in Sustainalytics.