Dividend Focus Fund
Quick Facts
| Investor | Institutional | |
| Ticker: | BUFDX | BUIDX |
| Daily Pricing: | ||
| As of 11/27/2023 | ||
| NAV: | $26.40 | $26.41 |
| $ Change: | $-0.06 | $-0.06 |
| % Change: |
-0.23% | -0.23% |
| YTD: |
14.58% | 14.73% |
| Inception Date: | 12/3/2012 | 7/1/2019 |
| Expense Ratio: | 0.95% | 0.80% |
| Total Net Assets: | $121.37 Million (9/30/23) | |
| Morningstar Category: | Large Cap Blend | |
| Benchmark Index: | Russell 1000 | |
| Dividend Distribution: | Quarterly | |
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Related Material: Fund Fact Sheet Q3 2023 PM Commentary Q3 2023 Portfolio Manager Q&A |
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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.
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
CFRA Research and Dividend.com recently hosted a webinar with the topic “Dividend Funds: Do we even need bonds?“. Buffalo Dividend Focus Fund co-portfolio manager Jeff Deardorff, CFA, was a featured presenter on the panel.
To learn more about what was discussed during the webinar and to access a free replay, click here.
Morningstar Rating
Overall Morningstar Rating™ of BUFDX based on risk-adjusted returns among 1,298 Large Blend funds as of 10/31/23.
Performance (%)
| As of 10/31/23 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | 10 YR | Since Inception |
|---|---|---|---|---|---|---|---|
| BUFFALO DIVIDEND FOCUS FUND - Investor | -6.01 | 6.55 | 7.43 | 11.15 | 10.13 | 10.80 | 11.57 |
| BUFFALO DIVIDEND FOCUS FUND - Institutional | -5.96 | 6.69 | 7.56 | 11.32 | 10.29 | 10.96 | 11.73 |
| Russell 1000 Index | -8.63 | 10.28 | 9.48 | 9.53 | 10.71 | 10.88 | 12.44 |
| S&P 500 Index | -8.25 | 10.69 | 10.14 | 10.36 | 11.01 | 11.18 | 12.64 |
| As of 9/30/23 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | 10 YR | Since Inception |
|---|---|---|---|---|---|---|---|
| BUFFALO DIVIDEND FOCUS FUND - Investor | -1.97 | 8.03 | 17.35 | 10.97 | 9.15 | 11.38 | 11.80 |
| BUFFALO DIVIDEND FOCUS FUND - Institutional | -1.92 | 8.17 | 17.54 | 11.15 | 9.31 | 11.55 | 11.97 |
| Russell 1000 Index | -3.15 | 13.01 | 21.19 | 9.53 | 9.63 | 11.63 | 12.80 |
| S&P 500 Index | -3.27 | 13.07 | 21.62 | 10.15 | 9.92 | 11.91 | 12.97 |
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|
| BUFFALO DIVIDEND FOCUS FUND - Investor | 23.93 | 20.81 | 0.13 | 12.06 | 18.02 | -5.05 | 27.66 | 16.64 | 20.97 | -8.75 |
| BUFFALO DIVIDEND FOCUS FUND - Institutional | 24.12 | 20.98 | 0.28 | 12.23 | 18.20 | -4.91 | 27.85 | 16.83 | 21.15 | -8.62 |
| Russell 1000 Index | 33.11 | 13.24 | 0.92 | 12.05 | 21.69 | -4.78 | 31.43 | 20.96 | 26.45 | -19.13 |
| Morningstar U.S. Large-Mid Cap Index | 33.20 | 13.32 | 0.92 | 11.59 | 21.71 | -4.52 | 31.61 | 21.11 | 26.44 | -19.50 |
3 Year Risk Metrics
| BUFDX vs Russell 1000 Index (As of 9/30/23) | |
|---|---|
| Upside Capture | 80.66 |
| Downside Capture | 80.55 |
| Alpha | 2.81 |
| Beta | 0.82 |
| Sharpe Ratio | 0.61 |
Hypothetical Growth of $10,000
Distributions
Capital Gains, if any – Record Date (12/4/23); Payment Date (12/5/23)
Net Investment Income, if any – Record Date (12/18/23); Payment Date (12/19/23)
| Payable Date | Distribution NAV | Net Investment Income | Short-Term Capital Gains | Long-Term Capital Gains | Distribution Total |
|---|---|---|---|---|---|
| 9/19/23 | $25.69 (Inv) $25.70 (Inst) | $0.05988226 $0.06325017 | - - | - - | $0.05988226 $0.06325017 |
| 6/21/23 | $24.99 (Inv) $24.99 (Inst) | $0.13682440 $0.14679972 | - - | - - | $0.13682440 $0.14679972 |
| 3/20/23 | $23.12 (Inv) $23.12 (Inst) | $0.05969832 $0.06839440 | - - | - - | $0.05969832 $0.06839440 |
| 12/20/22 | $23.08 (Inv) $23.08 (Inst) | $0.05908577 $0.06777300 | - - | - - | $0.05908577 $0.06777300 |
| 12/5/22 | $23.89 (Inv) $23.90 (Inst) | - - | - - | $0.38214 $0.38214 | $0.38214 $0.38214 |
| 9/20/22 | $23.27 (Inv) $23.27 (Inst) | $0.05162443 $0.06073302 | - - | - - | $0.05162443 $0.06073302 |
| 6/21/22 | $22.72 (Inv) $22.72 (Inst) | $0.06141577 $0.06934834 | - - | - - | $0.06141577 $0.06934834 |
| 3/18/22 | $25.56 (Inv) $25.56 (Inst) | $0.05379801 $0.06334236 | - - | - - | $0.05379801 $0.06334236 |
| 12/20/21 | $25.24 (Inv) $25.24 (Inst) | $0.02757485 $0.03722365 | - - | - - | $0.02757485 $0.03722365 |
| 12/3/21 | $24.99 (Inv) $24.99 (Inst) | - - | $0.10327 $0.10327 | $0.20964 $0.20964 | $0.31291 $0.31291 |
| 9/20/21 | $24.79 (Inv) $24.79 (Inst) | $0.03057741 $0.04007525 | - - | - - | $0.03057741 $0.04007525 |
| 6/18/21 | $24.27 (Inv) $24.26 (Inst) | $0.02933960 $0.03839857 | - - | - - | $0.02933960 $0.03839857 |
| 3/18/21 | $23.16 (Inv) $23.16 (Inst) | $0.05098388 $0.05942821 | - - | - - | $0.05098388 $0.05942821 |
| 12/18/20 | $21.72 (Inv) $21.72 (Inst) | $0.00905139 $0.01801390 | - - | - - | $0.00905139 $0.01801390 |
| 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 |
Portfolio
Portfolio Characteristics
| (As of 9/30/23) | |
|---|---|
| # of Holdings | 91 |
| Median Market Cap | $63.34 B |
| Weighted Average Market Cap | $442.87 B |
| 3-Yr Annualized Turnover Ratio | 5.08% |
| % of Holdings with Free Cash Flow | 69.51% |
| 30-day SEC Yield | 1.50% |
Top 10 Holdings
| Holding | Ticker / Maturity | Sector | % of Net Assets |
|---|---|---|---|
| Microsoft Corporation | MSFT | Information Technology | 5.08 |
| Apple Inc. | AAPL | Information Technology | 4.82 |
| Viper Energy Partners LP | VNOM | Energy | 3.22 |
| Meta Platforms Inc. Class A | META | Communication Services | 3.05 |
| Visa Inc. Class A | V | Financials | 2.46 |
| S&P Global, Inc. | SPGI | Financials | 2.29 |
| UnitedHealth Group Incorporated | UNH | Health Care | 2.15 |
| Arthur J. Gallagher & Co. | AJG | Financials | 2.03 |
| Horizon Therapeutics Public Limited Company | HZNP | Health Care | 2.03 |
| HCA Healthcare Inc | HCA | Health Care | 1.97 |
| TOP 10 HOLDINGS TOTAL | 29.11% | ||
Sector Weighting
As of 9/30/23. 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 9/30/23. Market Cap percentages may not equal 100% due to rounding.
Management
Commentary
PERFORMANCE COMMENTARY
(As of 9/30/23) —The Buffalo Dividend Focus Fund posted a return of -1.97% for the third quarter, outperforming the Russell 1000 index return of -3.15%. The Fund’s sector weightings
and security selection contributed to its relative outperformance. Compared
to the benchmark, the fund’s exposure to Communication Services, Consumer
Discretionary, Consumer Staples, Energy, Financials, Industrials, Information
Technology, and Utilities delivered constructive performance. The portfolio’s
investments with Healthcare, Materials, and Real Estate detracted from relative
performance.
Top Contributors
Specific securities that contributed most positively to performance include Marathon
Petroleum, Northern Oil and Gas, and Horizon Therapeutics. Marathon Petroleum
and Northern Oil and Gas both operate in the petroleum sector and benefited from the
huge gain in crude oil prices during the quarter. While shares of Horizon Therapeutics,
a manufacturer of and marketer of biopharmaceuticals, gained during the period as the
acquisition by Amgen was cleared by the Federal Trade Commission (FTC).
Top Detractors
Apple, HCA Healthcare, and Microsoft detracted from the fund’s performance
results. Shares of Apple, a manufacturer and marketer of consumer electronics, fell
on concerns regarding demand for cellphone handset sales and the impact of China’s
plan to ban government-backed agencies and state companies from using iPhones.
HCA Healthcare, owner and operator of hospitals and healthcare facilities, declined as
quarterly results and management’s outlook fell short of lofty expectations. Healthcare
regulatory risks also weighed on investor sentiment for the stock during the period.
Meanwhile Microsoft slumped as the company’s results and outlook failed to meet
robust expectations for cloud services and artificial intelligence (AI).
OUTLOOK
(As of 9/30/23) — Despite the uncertainty created by the hawkish Fed, domestic politics, and geo-political tensions, we remain focused on wide moat, large capitalization companies trading at reasonable valuations, in our view. As always, the fund will continue to emphasize
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.
Literature
| Buffalo Dividend Focus Fund Documents | Last Updated |
|---|---|
| Fact Sheet | 9/30/23 |
| Quarterly Q&A | 9/30/23 |
| Full Fund Holdings | 6/30/23 |
| Prospectus | 7/28/23 |
| Statement of Additional Information | 7/28/23 |
| Annual Report | 3/31/23 |
| Semi-Annual Report | 9/30/22 |
| Tax Guide - 2022 | 1/8/23 |
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 5 stars among 1,298 for the 3-year period, 4 stars among 1,188 for the 5-year period, and 5 stars among 885 Large Blend funds for the 10-year period ending 10/31/23.
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. ©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 Morningstar Style Box™ reveals a fund’s investment strategy by showing its investment style and market capitalization based on the fund’s portfolio holdings.