Quick Facts
InvestorInstitutional
Ticker:BUFDXBUIDX
Inception Date:12/3/20127/1/2019
Expense Ratio:0.96%0.81%
Total Net Assets:$79.76 Million  (9/30/20)
Category:Large Cap Blend
Benchmark:Morningstar U.S. Large-Mid Cap
Dividend Distribution:Quarterly
Related Material:
   Fund Fact Sheet Q3 2020
   PM Commentary Q3 2020
   Summary Prospectus
FUND OBJECTIVE & INVESTMENT PROCESS

The investment objective of the Buffalo Dividend Focus Fund is primarily current income, with long-term growth of capital as a secondary objective.

To pursue its investment objective, the Fund invests in dividend-paying equity securities, consisting of domestic common stocks, preferred stocks, and convertible securities. During normal market conditions, at least 80% of the Fund’s assets will be invested in dividend-paying equity securities, companies that declare and pay cash dividends on at least an annual basis.

While the Fund may invest in securities of companies of any size, the Fund managers expect the majority of common stocks purchased will be of large-cap companies, those with market capitalizations in excess of $10 billion at the time of initial purchase. In addition to investments in domestic securities, the Fund may invest up to 20% of its net assets in sponsored or unsponsored ADRs and securities of foreign companies that are traded on U.S. stock exchanges.

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We are focused on buying dividend-paying companies that can have sustainable competitive advantages, generate strong return on capital and free cash flow, have conservative balance sheets, and have great management teams.

We seek to buy these companies at reasonable valuations and believe that holding them for the long-term will generate favorable risk adjusted returns.

Paul Dlugosch, Portfolio Manager

Morningstar Rating

       

Overall Morningstar Rating™ of BUFDX based on risk-adjusted returns among 1,237 Large Blend funds as of 10/31/20.

Investment Style

Performance (%)

As of 10/31/203 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND - Investor0.27-0.086.358.109.5711.73
BUFFALO DIVIDEND FOCUS FUND - Institutional0.310.046.478.269.7311.89
  Morningstar U.S. Large-Mid Cap Index0.764.2911.3410.9211.8613.65
  S&P 500 Index0.372.779.7110.4211.7113.52
  Morningstar Large Blend Category0.510.056.308.019.6411.17
As of 9/30/203 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND - Investor6.541.779.809.5111.6312.12
BUFFALO DIVIDEND FOCUS FUND - Institutional6.581.899.919.6811.7912.29
  Morningstar U.S. Large-Mid Cap Index9.577.0616.7112.7514.2114.19
  S&P 500 Index8.935.5715.1512.2814.1514.07
  Morningstar Large Blend Category8.062.3010.709.5511.7711.61

* Partial year. Inception to year-end.

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
BUFDX vs Morningstar U.S. Large-Mid Cap Index (As of 6/30/20)
Upside Capture84.58
Downside Capture97.79
Alpha-2.06
Beta0.95
Sharpe Ratio0.40
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.
Distributions
Payable
Date
Distribution
NAV
Net Investment
Income
Short-Term Capital
Gains
Long-Term Capital
Gains
Distribution
Total
9/18/20$19.13 (Inv)

$19.13 (Inst)
$0.03170945

$0.03903915
-

-
-

-
$0.03170945

$0.03903915
6/18/20$18.26 (Inv)

$18.26 (Inst)
$0.03034499

$0.03590278
-

-
-

-
$0.03034499

$0.03590278
3/18/20$14.07 (Inv)

$14.07 (Inst)
$0.03107063

$0.03831320
-

-
-

-
$0.03107063

$0.03831320
12/18/19$18.82 (Inv)

$18.82 (Inst)
$0.04196909

$0.04964262
-

-
-

-
$0.04196909

$0.04964262
9/18/19$17.80 (Inv)

$17.80 (Inst)
$0.04731858

$0.05327159
-

-
-

-
$0.04731858

$0.05327159
6/18/19$17.20$0.06566509--$0.06566509
3/19/19$16.72$0.05232873--$0.05232873
12/18/18$15.33$0.08791977$0.02500$0.51339$0.62630977
9/18/18$17.96$0.05499230--$0.05499230
6/19/18$16.99$0.05791680--$0.05791680
3/20/18$16.72$0.04369471--$0.04369471
12/19/17$16.73$0.05315489$0.15204-$0.20519489
9/19/17$15.79$0.05107348--$0.05107348
6/20/17$15.53$0.04405814--$0.04405814
3/20/17$15.37$0.04662158--$0.04662158
12/20/16$14.58$0.04502534$0.06489$0.03508$0.14499534
9/20/16$13.78$0.04538819--$0.04538819
6/20/16$13.34$0.04391608--$0.04391608
3/18/16$13.15$0.04845082--$0.04845082
12/18/15$12.88$0.04061333$0.14263$0.11942$0.30266333
9/18/15$12.94$0.03816853--$0.03816853
6/18/15$14.29$0.04120635--$0.04120635
3/18/15$13.89$0.04200730--$0.04200730
12/18/14$13.53$0.03066401$0.54808$0.10086$0.67960401
9/18/14$13.50$0.02424009--$0.02424009
6/18/14$13.05$0.03496855--$0.03496855
3/18/14$12.11$0.03702784--$0.03702784
12/18/13$11.56$0.04725764$0.38271-$0.42996764
9/18/13$11.47$0.03960545--$0.03960545
6/18/13$11.13$0.03967611--$0.03967611
3/19/13$10.36$0.01492578--$0.01492578
2020 Distribution Dates:

Record Date: December 17, 2020 | Payable Date: December 18, 2020


Portfolio

Portfolio Characteristics
(As of 9/30/20) 
 
# of Holdings87
Median Market Cap$61.02 B
Weighted Average Market Cap$394.93 B
3-Yr Annualized Turnover Ratio21.49%
% of Holdings with Free Cash Flow68.92%
30-day SEC Yield0.94%
Top 10 Holdings
HoldingTicker / MaturitySector% of Net
Assets
MicrosoftMSFTTechnology5.63%
AppleAAPLTechnology4.44%
VisaVFinancial Services3.29%
S&P GlobalSPGIFinancial Services2.24%
Edison IntlEIXUtilities2.19%
UnitedHealth GroupUNHHealth Care2.18%
AmazonAMZNConsumer Discretionary2.00%
Horizon Pharma2.500%, 3/15/22Health Care1.92%
Cerence3.000%, 6/1/25Technology1.91%
American Electric PowerAEPUtilities1.65%
TOP 10 HOLDINGS TOTAL27.45%
As of 6/30/20. 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 9/30/20. 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 9/30/20. Market Cap percentages may not equal 100% due to rounding.

Management

Paul Dlugosch, CFA
Portfolio Manager

22 Years of Experience

 View full bio

Jeff Sitzmann, CFA
Portfolio Manager

32 Years of Experience

 View full bio

Jeff Deardorff, CFA
Portfolio Manager

21 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 9/30/20) — Equity markets sustained their momentum in the 3rd quarter, with the S&P 500 Index returning 8.93%. Macro data continued to improve, and companies broadly reported earnings that proved to be more resilient than expectations. While the U.S. experienced another spike in COVID-19 cases during the quarter and tragically surpassed 200,000 deaths, positive news on vaccines and therapy fronts continued to provide hope for investors.

The Russell 3000 Index increased 9.21% in the quarter. Growth continued to outperform value, as the Russell 3000 Growth Index advanced 12.86%, compared to the Russell 3000 Value Index return of 5.41%. Relative performance was correlated with market cap size in the quarter, with the large cap Russell 1000 Index delivering a return of 9.47%, compared to the Russell Mid Cap Index return of 7.46%, the smaller cap Russell 2000 Index return of 4.93%, and the Russell Micro Cap Index return of 3.69%. More cyclically-exposed Consumer Discretionary, Materials, and Industrial sectors performed best in the quarter. Energy was the sole declining sector, hurt by lingering weakness in oil demand.

PERFORMANCE COMMENTARY

(As of 9/30/20) — The Buffalo Dividend Focus Fund (BUFDX) posted a return of 6.54%, underperforming the Morningstar U.S. Large-Mid Cap Index return of 9.56% and the S&P 500 Index return of 8.93%. With the exception of our Energy and Utilities holdings, all sectors in the Fund and benchmark posted positive returns. The Fund’s sectors with the highest weightings had mixed performance relative to the benchmark index. Health Care and Financials posted favorable relative performance compared to the benchmark’s sectors performance, while Information Technology experienced lagging relative returns. Our holdings in the Energy, Real Estate, and Telecommunication Service sectors delivered constructive performance relative to the benchmark. Sectors including Consumer Discretionary, Consumer Staples, Industrials, Materials, and Utilities detracted from the Fund’s performance.

Top Contributors

Specific securities that contributed most positively to performance include Apple (AAPL), Horizon Therapeutics (HZNP), and Nuance Communications (NUAN). Apple advanced on solid quarterly results, anticipated growth from 5G iPhone sales, and announcement of a stock split. Horizon Therapeutics rose on strong quarterly results driven by the launch of Tepezza for thyroid eye disease and favorable study data on Krystexxa in combination with immunomodulation (methotrexate). Nuance Communications (speech recognition software and artificial intelligence) climbed on healthy quarterly results and favorable traction in new healthcare products.

Top Detractors

Viper Energy Partners (VNOM), BioMarin Pharmaceutical (BMRN), and Intel (INTC) diminished the Fund’s performance. Viper Energy, which holds mineral interests in the Permian Basin, declined on weak earnings due to falling energy prices and reduction in its dividend distribution. BioMarin Pharmaceutical fell after the U.S. Food & Drug Administration (FDA) failed to approve its hemophilia therapy. The regulator recommends two years of data from final-stage study. Intel, which develops and manufactures microprocessors and chipsets, dropped as the company issued a weak earnings outlook and delayed its next generation of computer chips.

OUTLOOK

(As of 9/30/20) — The stock market reached a record high during the quarter on the expectations that the economy can recover from the COVID-19 pandemic. The market fell from the peak as investors became concerned regarding a second wave of COVID-19 cases, the prospects for passage of a fiscal stimulus was bogged down by partisan politics, anxiety around the presidential election, lack of an agreement on Brexit, and rhetoric around new anti-trust regulation regarding the large technology companies. As the current quarter unfolds, the market will likely be impacted as some of these issues play out. Studies on vaccines and drug therapies to treat COVID-19 are likely to be released. In addition, the election will occur; nevertheless, the results may be delayed and contested. Additionally, Brexit deadlines will force decisions on an agreement or further delays. Resolution of these issues will likely influence the prospects, timing, and size of additional fiscal stimulus measures needed to support the economy over the intermediate term and sustainable growth over the longer term. Monetary policy continues to remain accommodative, as Central Banks reiterate their policies of not raising interest rates, continue debt-buying programs, and expand inflation tolerance levels.

Despite the uncertainty created by the pandemic, we remain focused on wide moat, large capitalization companies trading at reasonable valuations, in our view. As always, the Fund will continue to emphasize on competitively-advantaged companies that can be purchased at a fair value, in our opinion. As stock market volatility spikes, we will look for opportunities to find companies that fit our investment criteria, as we continue to follow our process of finding new investment ideas and to be ready when market declines provide better entry points.

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. Earnings growth is not representative of the fund’s future performance.

Literature

General Account
Forms
Investor
Class
Institutional
Class
Both
  New Account Application
  New Account Application - Entity
  Change or Add Account Details
  Cost Basis Method Election
  Power of Attorney
Individual Retirement Account (IRA) Forms
  RMD Waiver   NEW
  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.

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 Dividend Focus Fund (BUFDX) received 3 stars among 1,237 for the 3-year period and 3 stars among 1,071 Large Blend funds for the 5-year period ending 10/31/20.

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.