Quick Facts
Investor Institutional
Daily Pricing:  
As of 9/29/2022  
NAV: $19.61 $19.72
$ Change: $-0.35 $-0.36
% Change:
-1.75% -1.79%
-32.15% -32.09%
Inception Date: 4/16/2001 7/1/2019
Expense Ratio: 1.00% 0.86%
Total Net Assets: $1.07 Billion  (6/30/22)
Morningstar Category: Mid Cap Growth
Benchmark Index: Russell Midcap Growth
Related Material:
   Fund Fact Sheet Q2 2022
   PM Commentary Q2 2022
   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 533 Midcap Growth funds as of 8/31/22.

Morningstar Sustainability Rating™ of BUFTX out of 1,594 U.S. Equity Mid Cap funds as of 7/31/22, based on 97% of AUM

Carbon Metric Rating of BUFTX as of 6/30/22 in the Mid Cap Growth category, based on 95% of AUM; long positions only


Historical Sustainability Score Rank of BUFTX

Performance (%)

As of 8/31/223 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor-2.38-26.30-26.144.397.6611.289.4612.208.80
BUFFALO DISCOVERY FUND - Institutional-2.32-26.21-26.014.567.8311.459.6312.378.96
  Russell Midcap Growth Index0.45-25.09-26.696.9810.1612.068.9311.018.76
  Morningstar U.S. Mid Growth Index-0.13-28.78-29.268.4011.3312.258.85--
  Morningstar Mid-Cap Growth Category-0.84-24.85-25.817.939.8411.368.2910.067.02
As of 6/30/223 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor-21.37-31.14-28.872.226.9710.938.9711.028.52
BUFFALO DISCOVERY FUND - Institutional-21.34-31.10-28.772.377.1311.109.1311.198.68
  Russell Midcap Growth Index-21.07-31.00-29.574.258.8811.508.219.978.41
  Morningstar U.S. Mid Growth Index-21.33-33.93-30.655.2410.1911.808.29--
  Morningstar Mid-Cap Growth Category-20.56-30.28-28.585.048.6910.827.669.036.70

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
  Russell Midcap Growth Index15.8135.7411.90-0.207.3325.27-4.7535.4735.5912.73
  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 Russell Midcap Growth Index (As of 6/30/22)
Upside Capture84.16
Downside Capture96.56
Sharpe Ratio0.08
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 6/30/22) 
# of Holdings91
Median Market Cap$14.31 B
Weighted Average Market Cap$20.81 B
3-Yr Annualized Turnover Ratio77.05%
% of Holdings with Free Cash Flow84.44%
Active Share80.34%
Top 10 Holdings
HoldingTickerSector% of Net
Tenable HoldingsTENBTechnology2.11%
S&P GlobalSPGIFinancials2.10%
Martin Marietta MaterialsMLMMaterials1.81%
MGM Resorts IntlMGMConsumer Discretionary1.79%
HealthEquityHQYHealth Care1.76%
Generac HoldingsGNRCIndustrials1.75%
Horizon TherapeuticsHZNPHealth Care1.72%
As of 3/31/22. 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 6/30/22. 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 6/30/22. 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



(As of 6/30/22) — The stock market extended year-to-date losses during the 2nd quarter. Inflation, rising interest rates, and economic uncertainty continued to be major headwinds for investors as recession talks gained traction. The S&P 500 Index fell -16.10% during the quarter, bringing the total return for the first half of the year to -19.96%. News headlines, which included energy shortages, the war in Ukraine, China’s COVID lockdowns, and the potential for softer corporate earnings next quarter, added to the pessimistic market sentiment. However, the Federal Reserve’s hawkish stance on inflation, expectations for additional interest rate increases, and a reduction in the size of its balance sheet, continued to signal confidence in the U.S. economy moving forward.

The broad-based Russell 3000 Index declined -16.70% in the quarter. Value stocks fell less than growth stocks as the Russell 3000 Value Index returned -12.41%, versus a return of -20.83% for the Russell 3000 Growth Index. Relative performance slightly favored market cap size as large caps outperformed small caps in the quarter. Larger cap stocks, as measured by the Russell 1000 Index, returned -16.67% compared to the smaller cap Russell 2000 Index return of -17.20% and the Russell Microcap Index return of -18.96%. There were no advancing economic sectors for the quarter, but Consumer Staples, Energy, Utilities, and Healthcare held up better on a relative basis. Consumer Discretionary, Information Technology and Communication Services areas lagged.

(As of 6/30/22) — The Buffalo Discovery Fund (BUFTX) declined 21.37% for the quarter versus a decline of 21.07% for the Russell Midcap Growth Index. The Fund’s outperformance in the Healthcare and Industrials sectors was offset by lack of exposure to the Energy sector and underperformance in Consumer Discretionary. Consumer Discretionary stocks broadly moved lower as investors became increasingly concerned about the prospect of a recession. Ten-year Treasury yields moved up another 65 basis points this quarter, and the combination of rising financing costs and high inflation are beginning to squeeze discretionary spending budgets. Meanwhile, energy stocks were boosted by the prospect of a more prolonged war in Ukraine, rising travel demand, and realization that reductions to domestic refining capacity that took place during the pandemic will not be easy to replace. Our focus on innovative growth companies generally keeps us out of cyclical commodity investments such as oil exploration and refining, which contributed to relative underperformance this quarter.

To say that markets have been turbulent is an understatement: war, inflation, rising interest rates, supply chain disruption, ongoing COVID lockdowns in China, natural gas shortages in Europe… it has certainly been a challenging environment for investors. We remain focused on our core mission: to invest in disruptive growth companies that use innovation to create competitive advantage, all while maintaining a consistent discipline around valuation and risk. This is a strategy that we believe will deliver attractive risk-adjusted returns over time, and we are encouraged that growth companies are now trading at more appealing valuations.


agilon health (AGL) was the largest contributor to performance during the quarter. agilon health partners with physician groups to provide data-driven solutions that lead to better health outcomes at lower costs for their Medicare patients. We had fortuitous timing, initiating a position during the 2nd quarter with the stock down more than 50% from its 52-week high. We like that the company has above-average revenue visibility, given the contracted, recession-resistant nature of its business. We also see a substantial opportunity for growth as the healthcare industry moves towards value-based care.

Veeva Systems (VEEV) was another positive contributor for the quarter. The company provides cloud-based software solutions to the life sciences industry, including platforms for the management of drug trials, clinical data, and customer relationships. Veeva was another recent addition to the portfolio, and we initiated a position in this high-quality industry leader after the stock had sold off more than 40% from its recent 52-week high. While overall economic growth is slowing, the fundamentals supporting the pharmaceutical and life sciences industries remain healthy in our view.


Expedia (EXPE) was the leading detractor to fund performance for the quarter. Expedia is an online travel agency (OTA) with brands that include Expedia, Hotels.com, Vrbo, and Travelocity. There has been a strong recovery in demand for consumer travel coming out of the COVID pandemic, but investors are increasingly concerned that fundamentals have peaked ahead of a potential recession, and that Expedia has ceded some market share in hotels to Booking.com. However, we believe the company is well positioned to benefit from a multi-year recovery in services spending that we expect to play out, and that share loss concerns have been overstated due to the divestment of a subsidiary in Europe. We view the company’s current valuation compelling given the recent pullback.

TaskUs (TASK) was also a detractor during the quarter. TaskUs is a Business Process Outsourcing (BPO) company that primarily provides outsourced services to technology companies. The company reported better-than-expected results for the March quarter but failed to raise full-year estimates due to an offshore transition from its largest customer. This lowered revenues in the near term and the stock was punished by the market. However, we believe TaskUs’ offering can help companies looking to lower their costs and should eventually garner more attention due to the weaker macroeconomic environment. We believe the stock is undervalued these levels and the company’s shares remain in the portfolio.

(As of 6/30/22) — It was another challenging quarter for growth stocks as the market focused on playing defense against a backdrop of high inflation and rising interest rates. The Technology and Consumer Discretionary sectors each declined more than 20%, and there was dramatic outperformance from Consumer Staples, Energy, and Utilities. Unfortunately, we feel there is clearly downside risk to earnings estimates over the next two to three quarters.

Demand for consumer goods has slowed, cost pressures tied to wages and transportation remain elevated, and companies with bloated inventories will need to slow production and take markdowns. All of this will weigh on the minds of companies looking to make decisions around hiring and capital investment.

The good news is that tighter monetary policy is clearly having an impact on demand, and this should ultimately help to tame inflation. Demand for durable goods is normalizing at lower levels, ocean freight prices are falling, oil prices are back to pre-war levels, and growth in home price appreciation has slowed. A tech industry that saw equity valuations explode during the pandemic is now announcing layoffs. This is painful medicine in the short term, but something that needs to occur to bring down inflation and set the stage for a return to healthy, sustainable economic growth. Investor expectations have clearly moved lower, and a higher likelihood of recession is increasingly factored into stock prices. 80% of NYSE-listed stocks are now down at least 20% over the past eight months, a phenomenon typically seen ahead of recessions. We still believe a deep recession is unlikely given strong consumer and corporate balance sheets, as well as a strong labor market.

It will take time for these deflationary factors to flow through to consumer prices, but we believe the slowdown will allow the Federal Reserve to ease its tightening campaign later this year. If that scenario plays out, it should be good for equity valuations, and the pullback in stocks has given long-term investors an opportunity to buy great growth companies at reasonable prices. We are increasingly finding innovative, well-managed companies with durable competitive advantages trading at attractive valuations and believe investments we are making in today’s turbulent market will generate healthy multi-year returns. As always, 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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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 2 stars among 533 for the 3-year, 2 stars among 489 for the 5-year, and 3 stars among 379 Mid-Cap Growth funds for the 10-year period ending 8/31/22. 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.