Quick Facts
Investor Institutional
Daily Pricing:  
As of 6/8/2023  
NAV: $21.37 $21.53
$ Change: $0.03 $0.03
% Change:
0.14% 0.14%
10.73% 10.81%
Inception Date: 4/16/2001 7/1/2019
Expense Ratio: 1.00% 0.86%
Total Net Assets: $908.69 Million  (3/31/23)
Morningstar Category: Mid Cap Growth
Benchmark Index: Russell Midcap Growth
Related Material:
   Fund Fact Sheet Q1 2023
   PM Commentary Q1 2023
   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 527 Midcap Growth funds as of 4/30/23.

Morningstar Sustainability Rating™ of BUFTX out of 1,577 U.S. Equity Mid Cap funds as of 3/31/23, based on 99% of AUM

Carbon Metric Rating of BUFTX as of 3/31/23 in the Mid Cap Growth category, based on 99% of AUM; long positions only


Historical Sustainability Score Rank of BUFTX

Performance (%)

As of 4/30/233 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor-2.737.15-1.707.157.0010.8410.6211.758.70
BUFFALO DISCOVERY FUND - Institutional-2.717.21-1.567.317.1611.0010.7811.928.86
  Russell Midcap Growth Index-1.087.561.609.218.9610.849.4810.908.73
  Morningstar U.S. Mid Growth Index-3.046.42-2.337.809.1610.798.91--
  Morningstar Mid-Cap Growth Category-2.665.88-2.768.977.8410.118.609.986.86
As of 3/31/233 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor10.3610.36-10.1212.837.4510.9411.4112.628.88
BUFFALO DISCOVERY FUND - Institutional10.4510.45-9.9413.017.6211.1111.5812.799.04
  Russell Midcap Growth Index9.149.14-8.5215.209.0711.1710.1011.358.84
  Morningstar U.S. Mid Growth Index9.719.71-11.6614.539.7011.229.80--
  Morningstar Mid-Cap Growth Category7.657.65-11.9514.858.1210.349.2510.456.97

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 3/31/23)
Upside Capture90.73
Downside Capture99.69
Sharpe Ratio0.54
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 3/31/23) 
# of Holdings77
Median Market Cap$17.06 B
Weighted Average Market Cap$25.44 B
3-Yr Annualized Turnover Ratio50.33%
% of Holdings with Free Cash Flow84.42%
Active Share76.06%
Top 10 Holdings
HoldingTickerSector% of Net
CoStar GroupCSGPReal Estate2.27%
CopartCPRTConsumer Discretionary2.11%
NateraNTRAHealth Care1.87%
Five BelowFIVEConsumer Discretionary1.81%
AzentaAZTAHealth Care1.78%
Boston ScientificBSXHealth Care1.76%
As of 12/31/22. 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 3/31/23. 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 3/31/23. Market Cap percentages may not equal 100% due to rounding.


Dave Carlsen, CFA
Portfolio Manager

31 Years of Experience

 View full bio

Jamie Cuellar, CFA
Portfolio Manager

31 Years of Experience

 View full bio



(As of 3/31/23) — Capital markets moved higher in the first quarter of 2023 as the S&P 500 Index gained 7.50% and the Bloomberg Aggregate Bond Index advanced 3.0%. Big swings in expectations for the Federal Reserve’s monetary policy drove market volatility during the period. Initially investors were concerned with data showing stubbornly high inflation and the prospect of additional interest rate hikes. However, during the final days of the quarter bank failures from Silicon Valley Bank, Signature Bank, and Credit Suisse, dramatically changed market expectations towards monetary policy and the impact that a banking crisis could have on the broader economy. As a result, shorter term Treasury yields fell, and large cap growth stocks rallied in a flight to quality. The view was that growth companies would be the biggest beneficiaries of lower rates, a reversal of the headwinds faced throughout 2022. Technology stocks were by far the leading contributors to broad market performance during the quarter while value stocks and dividend payers lagged. Excluding the technology sector, the S&P 500 Index return would have only been 2.70% during the period.

Recapping quarterly results, the broad-based Russell 3000 Index advanced 7.18%. Growth stocks significantly outperformed value stocks to start out the year, as the Russell 3000 Value Index returned just 0.91% versus a return of 13.85% for the Russell 3000 Growth Index. Relative performance improved going up in market capitalization (size) as large caps advanced more than small caps in the quarter. Larger cap stocks returned 7.46%, as measured by the Russell 1000 Index, compared to the smaller cap Russell 2000 Index return of 2.74%, while the Russell Microcap Index returned -2.83% in the quarter.


(As of 3/31/23) — The Buffalo Discovery Fund gained 10.36% for the quarter versus an increase of 9.14% for the Russell Midcap Growth Index. Outperformance in the Consumer, Energy and Financials sectors was partly offset by modest underperformance in Communication Services. The 10-year Treasury yield declined for the first time in more than a year as tighter credit conditions, moderating inflationary pressures, and slower consumer spending growth all suggest the Fed tightening cycle could be nearing its end. This backdrop of declining interest rates and expectations of slower economic expansion led to outperformance from growth stocks and rate-sensitive consumer cyclicals.

The Discovery Fund’s exposure to quality growth stocks was clearly beneficial in the first quarter of 2023. That was a welcome change from 2022, when the sharpest rise in interest rates in decades led to substantial underperformance for growth stocks and a rotation into defensive sectors such as energy, utilities, and consumer staples.

We clearly expect the Fed to remain vigilant on inflation and are cognizant of the well telegraphed recession that could be in front of us, but are also optimistic the market has taken much of its needed medicine and that companies gaining market share through disruptive innovation and durable competitive advantage will continue to outperform as the macro backdrop stabilizes.


National Instruments Corporation (NATI) was the largest contributor to performance during the quarter. National Instruments is a leader in software-enabled testing and measurement systems used in engineering applications. Acquisition rumors led to a 38% increase in the share price during the first quarter, and management subsequently announced that it would be acquired by Emerson Electric.

Universal Display Corporation (OLED) was another top contributor for the quarter. Universal Display is a leader in the development and commercialization of organic light-emitting diode technologies used in display and solid-state lighting applications. 2022 was a challenging year for the industry due to weakness in TV and smartphone sales, but investors are increasingly confident the display market is nearing a bottom. Manufacturers are beginning to add capacity as Universal Display gains share in products such as laptops and monitors, and phosphorescent blue diodes—a product in development for many years—are finally coming to market. We believe these events should reaccelerate growth for the company as the year unfolds.


Calix Inc. (CALX) was the top detractor for the quarter. The company is a leading supplier of cloud services and software solutions to telecom networks and broadband service providers. Fundamentals have been healthy with both revenue and earnings consistently beating expectations, but investors have become more cautious on the spending environment for telecom equipment given persistent demand weakness at industry bellwethers AT&T and Verizon. We reduced our position in late-2022 when the stock was approaching all-time highs but continue to believe this is a well-run business with meaningful growth opportunities in cloud services.

Azenta (AZTA) was also a detractor during the quarter. Following the sale of its semiconductor business, Azenta is now a pure-play life sciences company with a cash-rich balance sheet. Investors reacted negatively to 2023 guidance that projected a slower pace of margin expansion due to investments in their global sales infrastructure. Headwinds from currency, China lockdowns, and declining COVID-related revenues have also weighed on recent results. However, the long-term trend towards cell and gene therapy and biologics has not slowed. These new drugs require a materially different infrastructure for storage and shipping of biological materials, and AZTA has carved out a clinical research niche by offering both cold storage repositories for tissue samples and genomic analysis services to leading biopharma companies.


(As of 3/31/23) — We are anticipating a period of slower economic expansion in 2023 – and possibly recession – driven by higher interest rates and decelerating growth in both jobs and wages. However, when major companies such as Home Depot include recession scenarios in their forward guidance, we have to believe this negative outcome is largely anticipated by investors. We look for the Federal Reserve to keep interest rates elevated given tight labor markets and accelerating economic growth in China as that country reopens following a late 2022 COVID surge. The Fed’s aggressive tightening policy appears to be working, though, and inflation is steadily drifting lower.

It can seem counterintuitive, but periods of weaker economic expansion are often great times to invest in innovative growth stocks. Valuations are more reasonable, companies tend to get smarter on expenses, modest increases in revenue can still drive expense leverage and outsized relative earnings growth, and these periods typically end with the Federal Reserve cutting interest rates to reaccelerate the economy, and that is good for growth stock valuation multiples. Investors certainly digested a lot of bad news in 2022: the launch of a war in Ukraine, decades-high inflation, the lapping of more than $1 trillion of stimulus payments, a strong U.S. dollar, and ongoing supply chain disruption. Putting these headwinds in the rear-view mirror
ultimately creates a much more favorable outlook for long-term equity investors.

Our strategy is to take a long-term, risk-aware view and build positions in innovation focused growth companies at attractive prices. Our investment time horizon is a competitive advantage, and we remain focused on dominant franchises with strong balance sheets and scalable business models. We believe this should lead to the 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.


General Account
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Coverdell Education Savings Accounts (ESA) Forms
  Coverdell ESA Application
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Retirement Information
  Retirement Savings Options for Individuals

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 2 stars among 527 for the 3-year, 3 stars among 497 for the 5-year, and 4 stars among 386 Mid-Cap Growth funds for the 10-year period ending 4/30/23. 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.