Quick Facts
Investor Institutional
Daily Pricing:  
As of 4/12/2024  
NAV: $24.29 $24.50
$ Change: $-0.45 $-0.45
% Change:
-1.82% -1.80%
1.25% 1.28%
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 Q4 2023
   PM Commentary Q4 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 520 Midcap Growth funds as of 3/31/24.

Performance (%)

As of 3/31/243 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor6.296.2919.720.899.2210.0714.8210.239.33
BUFFALO DISCOVERY FUND - Institutional6.326.3219.720.899.2210.0714.8210.239.33
  Russell Midcap Growth Index9.509.5026.284.6211.8211.3515.6410.419.55
As of 3/31/243 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO DISCOVERY FUND - Investor6.296.2919.720.899.2210.0714.8210.239.33
BUFFALO DISCOVERY FUND - Institutional6.326.3219.720.899.2210.0714.8210.239.33
  Russell Midcap Growth Index9.509.5026.284.6211.8211.3515.6410.419.55

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 3/31/24)
Upside Capture94.96
Downside Capture105.57
Sharpe Ratio-0.08
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 3/31/24) 
# of Holdings90
Median Market Cap$24.97 B
Weighted Average Market Cap$35.38 B
3-Yr Annualized Turnover Ratio38.93%
% of Holdings with Free Cash Flow92.22%
Active Share72.97%
Top 10 Holdings
HoldingTickerSector% of Net
MSCI Inc. Class AMSCIFinancials3.12
IQVIA Holdings IncIQVHealth Care2.68
Martin Marietta Materials, Inc.MLMMaterials2.25
DoubleVerify Holdings, Inc.DVInformation Technology2.24
Ingersoll Rand Inc.IRIndustrials2.05
CoStar Group, Inc.CSGPIndustrials2.04
AMETEK, Inc.AMEIndustrials2.03
CrowdStrike Holdings, Inc.CRWDInformation Technology1.68
Copart, Inc.CPRTIndustrials1.66
As of 12/31/23. 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 3/31/24. 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 3/31/24. Market Cap percentages may not equal 100% due to rounding.


Dave Carlsen, CFA
Portfolio Manager

31 Years of Experience

 View full bio



(As of 12/31/23)

The Buffalo Discovery Fund rose 14.89% for the quarter versus an advance of 14.55%
for the Russell Midcap Growth Index. Outperformance was driven by our holdings
in the Financials, Communication Services, and Materials sectors. Stocks reacted
positively to improving inflation data, resilient consumer spending, and a significant
decline in the 10-year Treasury yield. The positive news flow culminated with Federal
Reserve Chairman Powell’s dovish speech in mid-December that suggested the hiking
cycle is finished and cuts to short-term interest rates are on the way in 2024.

The rally was broad-based except for the energy sector, which gave back nearly all its
strong third quarter performance gains. Consumer Staples were also a relative laggard
versus the broader market during the quarter, marking that sector’s third consecutive
quarter of underperformance. Staples stocks continue to be weighed down by weak
grocery volumes and shoppers trading down to private label products.

It was clearly a “risk-on” quarter and a strong end to the year for stocks. While the
economy is clearly slowing, investors were encouraged that inflation is progressing
towards the Fed’s 2% target while consumer spending continues to increase,
supported by low unemployment and rising wages. A deep recession appears increasingly unlikely as the Fed stands ready to cut interest rates whenever it believes
economic stimulus is needed. Plenty of macro risks remain, however, and valuations
in certain segments of the market are beginning to look frothy. Through all the noise
and uncertainty, the Discovery Fund remains focused on its core mission: to invest in
high-quality, disruptive growth companies that use innovation to gain share and create
competitive advantage, all while maintaining a consistent discipline around valuation
and risk. We believe this is a strategy that will continue to deliver attractive risk-adjusted
returns over time.

Top Contributors
CrowdStrike (CRWD) was the largest contributor to performance with shares climbing
more than 50% during the quarter. CrowdStrike provides businesses with cloud-based
cybersecurity solutions, and investors reacted positively to strong quarterly results
and a promising outlook. The company beat consensus expectations for revenue and
EBITDA, spoke to an improving new-business win rate, and was encouraged by recent
product launches in cloud security and identity protection. This allowed management
to raise its full-year sales and earnings guidance despite a challenging economic
environment. Cybersecurity is an industry with secular growth tailwinds, and we believe
CrowdStrike should continue to gain market share.

Expedia (EXPE) was another top contributor with shares rising 47% during the quarter.
The company is an online travel platform with brands that include Expedia, Vrbo, and
Hotels.com. Third quarter results were modestly ahead of consensus and the company
made two announcements that received an enthusiastic response from investors.
First, the company announced it had finally completed a multiyear effort to put its
tech stack on a common platform and migrate it to the cloud. Second, the company
surprised investors with a $5 billion share repurchase announcement. At the time of the
announcement, the repurchase plan accounted for 40% of the company’s market cap.
Despite the 50% move in its share price, Expedia continues trades at just 14x earnings
and benefits from rising penetration of online travel spending.

Top Detractors
Aptiv (APTV) was the top detractor for the quarter. The company is a supplier to the
automotive industry with products that support electrical architectures, safety/perception
systems, mobile connectivity, and in-vehicle software. Shares declined 9% during the
quarter, driven by earnings guidance that came in below consensus estimates. Investors
are concerned that weakness will drag into 2024 due to weakening global economies and
moderating demand for electric vehicles. While there are certainly near-term concerns
around the macro environment, Aptiv continues to gain market share and its products will
launch on several new platforms in 2024. The company has a strong balance sheet, and
we believe share repurchases are likely to increase given the current equity valuation.

Schlumberger (SLB) was also a detractor during the quarter with shares declining 9%.
Schlumberger is engaged in energy exploration and production, as well as supplying
technology solutions to improve well utilization rates and reduce carbon emissions.
Guidance for organic revenue growth of just 3% for the fourth quarter was a modest
disappointment for investors, but the bigger culprit was oil prices. WTI crude declined
roughly 20% during the quarter to around $72 barrel as global economies are slowing,
the war in Gaza has not spread beyond that region, and U.S. oil production is projected
to hit a record high in 2024. In spite of the weakness during the period we continue to
maintain our position to the company.


(As of 12/31/23)

The economy is slowing to a more sustainable level of growth as consumers have
spent much of the excess savings accumulated during the pandemic. With demand
moderating and the job market beginning to loosen, we believe inflationary pressures
will continue to moderate. The Fed’s aggressive tightening cycle appears to be getting
the job done on inflation, and a disaster scenario of stubbornly high inflation coupled
with a consumer-led recession appears to be off the table. Moreover, the Fed now has
firepower to stimulate when needed.

While the market has moved sharply higher, certain parts of the economy remain
weak. Businesses that pulled forward a lot of demand during the years of COVID and
0% interest rates have been experiencing softening demand for more than a year now.
Consumer categories like home furnishings, leisure goods, and consumer electronics
have given back the bulk of their COVID gains over the past two years. Existing
home sales are at a ten-year low. Businesses that stockpiled inventory during the
supply chain crisis are now cutting orders, and sales cycles for enterprise technology
spending have lengthened as CFO’s look to conserve cash.

Following the sharp rally to close out 2023, the market seems likely to consolidate its
gains in the near term. Numerous forward-looking indicators suggest the economy will
soften in 2024, including an inverted Treasury yield curve, a decline in the Conference
Board Leading Economic Index, and the National Federation of Independent
Businesses’ (NFIB) hiring plans survey. And while the Fed can cut short-term interest
rates to stimulate demand, we do not expect another round of stimulus checks given
the Federal government is already running an unsustainable $2 trillion annual deficit.
Against this backdrop, expect management teams to offer cautious forward-looking

We do not have a rising economic tide to lift all boats, but we are still finding highquality companies benefiting from disruptive innovation and secular tailwinds.
Innovative growth businesses with strong balance sheets, scalable business
models, and wide competitive moats – whether they manufacture medical devices,
cybersecurity software, or innovative consumer products – are likely to outperform in a
slower growth environment. 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.


Buffalo Discovery Fund
  Fact Sheet12/31/23
  Quarterly Commentary12/31/23
  Full Fund Holdings6/30/23
  Statement of Additional Information7/28/23
  Annual Report3/31/23
  Semi-Annual Report9/30/22
  Tax Guide - 20231/8/24
General Account
  New Account Application
  New Account Application - Entity
  Change or Add Account Details
  Cost Basis Method Election
  Power of Attorney
Individual Retirement Account (IRA) Forms
  IRA Account Application
  IRA Beneficiary Addition / Change
  IRA Required Minimum Distribution (RMD)
  IRA / Qualified Plan Distribution Request
  IRA Transfer
Coverdell Education Savings Accounts (ESA) Forms
  Coverdell ESA Application
  Coverdell ESA Distribution Request
  Coverdell ESA Transfer
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 3 stars among 520 for the 3-year, 2 stars among 489 for the 5-year, and 3 stars among 393 Mid-Cap Growth funds for the 10-year period ending 3/31/24. Other share classes may have different performance characteristics.