Quick Facts
Inception Date:4/16/20017/1/2019
Expense Ratio:1.01%0.86%
Total Net Assets:$1.76 Billion  (12/31/21)
Morningstar Category:Mid Cap Growth
Benchmark Index:Morningstar U.S. Mid Growth
Related Material:
   Fund Fact Sheet Q4 2021
   PM Commentary Q4 2021
   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 Ratings


Overall Morningstar Rating™ of BUFTX based on risk-adjusted returns among 538 Midcap Growth funds as of 12/31/21.

Morningstar Sustainability Rating™ of BUFTX out of 1,555 U.S. Equity Mid Cap funds as of 11/30/21, based on 96% of AUM

Carbon Metric Rating of BUFTX as of 9/30/21 in the Mid Cap Growth category, based on 78% of AUM; long positions only


Historical Sustainability Score Rank of BUFTX

Performance (%)

As of 12/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor3.9311.9011.9025.3818.2416.6512.5611.0310.71
BUFFALO DISCOVERY FUND - Institutional3.9812.0712.0725.5718.4116.8312.7311.1910.88
Morningstar U.S. Mid Growth Index4.7614.9714.9731.7222.7017.4912.3210.9110.25
Morningstar Mid-Cap Growth Category2.7613.0513.0527.4719.3715.6611.1310.108.75
As of 12/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor3.9311.9011.9025.3818.2416.6512.5611.0310.71
BUFFALO DISCOVERY FUND - Institutional3.9812.0712.0725.5718.4116.8312.7311.1910.88
Morningstar U.S. Mid Growth Index4.7614.9714.9731.7222.7017.4912.3210.9110.25
Morningstar Mid-Cap Growth Category2.7613.0513.0527.4719.3715.6611.1310.108.75

BUFFALO DISCOVERY FUND - Investor19.7336.6110.685.645.5625.44-6.5431.6333.8111.90
BUFFALO DISCOVERY FUND - Institutional19.9136.8210.855.805.7225.62-6.4031.8234.0312.07
Morningstar U.S. Mid Growth Index15.8134.079.77-0.716.4625.67-3.1636.0146.1714.97
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 12/31/21)
Upside Capture74.36
Downside Capture89.85
Sharpe Ratio1.33
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 12/31/21) 
# of Holdings82
Median Market Cap$21.94 B
Weighted Average Market Cap$27.21 B
3-Yr Annualized Turnover Ratio85.36%
% of Holdings with Free Cash Flow82.93%
Active Share80.79%
Top 10 Holdings
HoldingTickerSector% of Net
IHS MarkitINFOIndustrials2.34%
Generac HoldingsGNRCIndustrials1.97%
ExpediaEXPEConsumer Discretionary1.93%
Tenable HoldingsTENBTechnology1.87%
NateraNTRAHealth Care1.81%
Keysight TechnologiesKEYSTechnology1.78%
Verisk AnalyticsVRSKIndustrials1.72%
ICONICONHealth Care1.70%
As of 9/30/21. 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 12/31/21. 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 12/31/21. Market Cap percentages may not equal 100% due to rounding.


Dave Carlsen, CFA
Portfolio Manager

30 Years of Experience

 View full bio

Jamie Cuellar, CFA
Portfolio Manager

30 Years of Experience

 View full bio

Ken Laudan
Portfolio Manager

29 Years of Experience

 View full bio

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



(As of 9/30/21) — Equity market returns were somewhat mixed in the 3rd quarter, but the S&P 500 Index etched out a modestly positive return of 0.58%. The global recovery hit a speed bump during the period as the world dealt with rising COVID-19 Delta variant infections, an energy price spike, and supply chain issues that continued to constrain economic growth. After trading lower earlier in the quarter, interest rates increased later in the period in response to higher-than-expected inflation data and an admission from the Federal Reserve (the “Fed”) that they would need to begin removing monetary stimulus from the economy sometime soon.

The Russell 3000 Index declined -0.10% in the quarter. Growth stocks outperformed Value stocks as the Russell 3000 Growth Index returned 0.69% versus a drop of -0.93% for the Russell 3000 Value Index. Relative performance was correlated with market cap size as large caps outperformed small caps in the quarter. The large cap Russell 1000 Index returned 0.21% compared to the Russell Midcap Index return of -0.93%. Smaller market cap indices were even more negative, with the Russell 2000 Index returning -4.36% and the Russell Microcap Index returning -4.98%. Financials were the top performing sector for the quarter, while Industrials and Materials were lagging sectors.


(As of 9/30/21) — The Buffalo Discovery Fund (BUFTX) returned -0.62% during the quarter versus the Morningstar U.S. Mid Growth Index’s return of 0.20%. The Fund’s modest underperformance was driven by stock selection in the Information Technology and Telecommunications Services. Our relative underweight to the benchmark index’s highest valuation software constituents continued to act as a headwind. Outside of Technology and Telecom, strong stock selection in Consumer, Industrials, and Health Care acted as positive contributors relative to the index. The Fund continues to invest in disruptive and 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.


Icon Plc (ICON) was a top contributor during the quarter. The company is a leading clinical research organization (CRO) whose services help pharma, biotech, and medical device companies develop and commercialize products. In our view, the company is well positioned to benefit from the secular outsourcing trend in the health care industry. During the quarter, investors warmed to the prospect of higher-than-expected revenue and cost synergies following the recently completed acquisition of competitor PRA Health Services. This merger provides global scale and services breadth, as pharma and biotech customers continue to pursue more outsourcing arrangements and move from trial-by-trial engagements to longer-term strategic customer relationships.

Palo Alto Networks, Inc. (PANW), a leading network security solutions provider, was another strong contributor in the quarter. Investors cheered better-than-expected billing guidance for fiscal year 2022, driven by a robust spending environment and strong adoption of next generation products. Security spending remains strong following numerous high profile cyber-attacks in recent years, while at the same time the work from home trend has expanded the threat landscape beyond the corporation.


Bandwidth (BAND) was the largest detractor from performance results during the quarter. The stock was weak for a couple of reasons, namely consolidation and vertical integration within the Communications Platform as a Service (CPaaS) group that brought fears of Bandwidth having a competitive disadvantage. The company also continued tough comparisons throughout the rest of 2021, especially in the 4th quarter where Bandwidth benefited from additional political traffic in 2021. We believe the latter is a short term phenomenon that will anniversary in this upcoming quarter, and Wall Street is failing to give credit for Bandwidth’s own acquisition activity, namely the acquisition of Voxbone, which accelerates Bandwidth’s entry into Europe.

Universal Display (OLED) was also a meaningful detractor from performance for the quarter. The stock languished due to concerns over supply chain disruption and logistics issues evident in most consumer electronics, especially in televisions and handsets, which constitute the bulk of Universal Display’s end markets. We believe OLED TVs continue to gain market share in the premium segment, and additional OLED TV capacity and potential new products could provide a positive backdrop for OLED shares, when supply chains improve post COVID lockdowns in its key manufacturing areas.


(As of 9/30/21) — The market environment remains constructive for equity investing. Corporate earnings are recovering and interest rates remain relatively low by historical standards, providing a healthy backdrop for investors’ allocation to equities. Vaccination rates are increasing worldwide, contributing to increased mobility, improved business and consumer confidence, and rapidly improving economic activity. Supply constraints, labor shortages, shipping bottlenecks, and a slow return to work are causing transitory inflation and holding back the economy in the near term, but, as these things ease, robust corporate earnings growth is poised to follow suit, in our opinion.

As we get deeper into recovery, concerns about high debt levels, rising tax rates, decelerating growth, virus mutations, and a more hawkish Federal Reserve could begin to affect equity valuations. Inflation and the Fed response to it will be of vigorous interest throughout the remainder of the year. In its latest public messaging, we think the Fed has already passed the threshold from Dovish to Hawkish regarding its messaging on inflation. As the drum-beat for Fed tapering grows louder, we think the market could transition incrementally away from speculative and early cycle stocks and rotate increasingly to growth and quality, as tapering begins to reduce liquidity, while peaking growth rates cause investors to be more discerning about cyclically-oriented equities.

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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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.

©2021 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 538 for the 3-year, 3 stars among 491 for the 5-year, and 4 stars among 380 Mid-Cap Growth funds for the 10-year period ending 12/31/21. 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.