Quick Facts
Inception Date:4/16/20017/1/2019
Expense Ratio:1.02%0.87%
Total Net Assets:$1.37 Billion  (3/31/20)
Category:Mid Cap Growth
Benchmark:Morningstar U.S. Mid Growth
Related Material:
   Fund Fact Sheet Q1 2020
   PM Commentary Q1 2020
   Summary Prospectus

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, Co-Portfolio Manager

Morningstar Rating


Overall Morningstar Rating™ of BUFTX based on risk-adjusted returns among 559 Midcap Growth funds as of 5/31/20.

Investment Style

Performance (%)

As of 5/31/203 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO DISCOVERY FUND - Investor7.141.5711.7711.869.9214.2211.289.41
BUFFALO DISCOVERY FUND - Institutional7.221.6511.9612.0310.0814.4011.459.57
Morningstar U.S. Mid Growth Index12.977.9721.5216.9012.0014.4710.858.61
Morningstar Mid-Cap Growth Category6.320.6113.8411.959.2512.589.467.02
As of 3/31/203 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO DISCOVERY FUND - Investor-17.95-17.95-9.645.375.6011.1310.048.27
BUFFALO DISCOVERY FUND - Institutional-17.90-17.90-9.485.545.7711.3010.218.43
Morningstar U.S. Mid Growth Index-17.00-17.00-6.738.526.2211.109.027.19
Morningstar Mid-Cap Growth Category-20.64-20.64-11.174.664.339.467.725.78
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 Morningstar U.S. Mid Growth Index (As of 3/31/20)
Upside Capture81.38
Downside Capture97.39
Sharpe Ratio0.23
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 3/31/20) 
# of Holdings94
Median Market Cap$14.65 B
Weighted Average Market Cap$20.53 B
3-Yr Annualized Turnover Ratio80.68%
% of Holdings with Free Cash Flow86.96%
Active Share63.56%
Top 10 Holdings
HoldingTickerSector% of Net
The Cooper Cos.COOHealth Care1.81%
Take-Two InteractiveTTWOCommunications1.71%
Global PaymentsGPNIndustrials1.68%
CoStar GroupCSGPReal Estate1.67%
IHS MarkitINFOIndustrials1.60%
Bio-TechneTECHHealth Care1.57%
MSCIMSCIFinancial Services1.57%
EquinixEQIXReal Estate1.54%
SBA CommunicationsSBACReal Estate1.50%
Kansas City SouthernKSUIndustrials1.49%
As of 3/31/20. 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 3/31/20. 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 3/31/20. Market Cap percentages may not equal 100% due to rounding.


Dave Carlsen, CFA
Portfolio Manager

27 Years of Experience

 View full bio

Jamie Cuellar, CFA
Portfolio Manager

28 Years of Experience

 View full bio

Ken Laudan
Portfolio Manager

27 Years of Experience

 View full bio

  Click here to read about the recent portfolio manager changes for the Buffalo Discovery Fund.



(As of 3/31/20) — Global equity markets fell sharply in the 1st quarter of 2020 in reaction to the global spread of COVID-19. As the case count increased exponentially, the only effective response was for countries to go into lockdown. The economic impact of these actions became clear as the quarter progressed and virtually all asset classes suffered as a result. From February 19 through March 23, the U.S. stock market, as measured by the S&P 500 Index, declined around 34%, which was the fastest meltdown in history. Central banks and governments responded quickly to this event, with the U.S. Federal Reserve (the “Fed”) cutting interest rates twice in March and announcing unlimited quantitative easing. The U.S. Senate passed a $2 trillion stimulus package, providing assistance to individuals and businesses in distress. Optimism around these efforts helped the market rally into quarter end, leaving the S&P 500 Index down 19.60% from the start of the year.

The broad market Russell 3000 Index declined 20.90% in the 1st quarter. Growth outperformed value, with the Russell 3000 Growth Index declining 14.85% compared to the Russell 3000 Value Index decline of 27.32%. By capitalization size, large cap stocks held up best, with a -20.22% return in the quarter, represented by the Russell 1000 Index. The Russell Mid Cap Index fell -27.07%, followed by the smaller cap Russell 2000 Index which declined -30.61%. Best performing sectors were the Technology, Health Care, and Consumer Staples sectors. The Energy sector was hit hardest as falling demand and rising supply from Saudi Arabia caused oil prices to crater. The economically-sensitive Financial and Industrial sectors were also among the worst performing sectors in the quarter.


(As of 3/31/20) — The Buffalo Discovery Fund (BUFTX) fell 17.95% during the quarter versus the Morningstar U.S. Mid Growth Index’s decline of 17.00% and the Morningstar Mid Cap Growth Peer Group decline of 20.64%. The Fund outperformed the benchmark in the Energy, Industrials, Financials, Real Estate, Telecom Services, and Materials sectors, while the Consumer Discretionary, Health Care, and Technology sectors weighed on relative returns. Cyclically-dependent and financially-leveraged stocks performed worst in the Fund and Index with energy, materials, travel, entertainment, and consumer retail stocks particularly hard hit. The Energy sector, where the Fund is underweight, was the worst-performing sector, suffering from a nasty combination of excess supply and diminished global energy demand. The Fund continues to invest in innovative growth companies with relatively-attractive valuations – a strategy we believe should be a key driver of above-index, risk-adjusted returns over the long term.


Dexcom Inc. is a leading manufacturer of continuous glucose monitoring devices for the management of diabetes. The company’s differentiated products excel at accuracy, comfort, and ease of use, resulting in share gains and a favorable long-term outlook within the diabetes care industry. Its stock price was one of few that rose in the quarter, as investors flocked to Dexcom’s durable growth, low elective procedure risk, and
relatively recession-resistant business model.

MSCI Inc. is a leading Index and ETF provider. The company continues to benefit from the shift to low-cost passive investing, while, in the near term, investors cheered the
resiliency of the subscription business, high switching costs inherent in the benchmark index business segment, and the exciting potential of the newer analytics and Environmental, Social, and Governance (ESG) focused business initiatives.


Align Technology is a leading supplier of clear aligners for dental malocclusion. Its stock price fell on expectations that COVID-19 fears will lead to lower case volume growth in the near term, which could make it more challenging for the company to fend off new entrants in its market. We believe prosperous growth is sustainable over the intermediate-to-long-term, as the company has expanded its products to address nearly 70% of the orthodontic market, which continues to convert from metal braces to clear aligners.

IAC/Interactive is a diversified internet services company offering dating websites, a digital home services marketplace, and other emerging internet businesses. Social distancing and shelter at home initiatives have negatively impacted demand for home services and advertising on their branded internet sites.


(As of 3/31/20) — The fiscal and monetary response to the COVID-19 pandemic has been relatively swift and expansive, with indications that if conditions do not improve, world leaders and global central banks will do whatever is necessary to revive growth. Their efforts so far are encouraging, and markets have begun to stabilize and become more hopeful. In the near term, investors appear myopically focused on the state of new case volumes,
resulting in high stock correlations. Upcoming earnings results seem far less important than an assessment of 2021-2022 earnings power. Over the intermediate term, the revival of global growth will depend on how soon the pandemic can be contained through a combination of social distancing, better testing, improved therapies, vaccine development, and perhaps seasonal curtailment. Time will tell.

In the meantime, global economic uncertainty and low business and consumer confidence is weighing on the market and near term corporate fundamentals. This is opening up attractive buying opportunities for some of our favorite secular growth beneficiaries on the wish list.

We are not blindly buying on lower stock prices, but instead we are mindful of the macroeconomic backdrop, the sensitivity of our companies to discretionary spending, and the negative effect unfavorable leverage can have on corporate profit cycles in bad-time scenarios. We keep a keen eye on the degree of contraction that current prices discount and the degree to which management teams can protect profits and shed risk, while still retaining the competitive advantages that position them to excel on the upturn. Our work is beginning to tell us growing reward and upside opportunity trumps downside risk in many instances. We are patiently waiting for these good-odds situations and strike when we get them.

Economic conditions may ebb and flow, but our focus is steady – to invest in attractively-priced, financially-strong, well-managed companies that can benefit from innovative strategies and disruptive megatrends.

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.


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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.

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 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.

The Buffalo Discovery Fund (BUFTX) received 3 stars among 559 for the 3-year, 4 stars among 496 for the 5-year, and 4 stars among 382 Mid-Cap Growth funds for the 10-year period ending 5/31/20.

In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated. ©2020 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 Morningstar Style Box™ reveals a fund’s investment strategy by showing its investment style and market capitalization based on the fund’s portfolio holdings.