Quick Facts
Investor Institutional
Ticker: BUFDX BUIDX
Daily Pricing:  
As of 2/7/2023  
NAV: $24.79 $24.79
$ Change: $0.30 $0.29
% Change:
1.22% 1.18%
YTD:
6.49% 6.49%
Inception Date: 12/3/2012 7/1/2019
Expense Ratio: 0.93% 0.78%
Total Net Assets: $113.63 Million  (12/31/22)
Morningstar Category: Large Cap Blend
Benchmark Index: Russell 1000
Dividend Distribution: Quarterly
Related Material:
   Fund Fact Sheet Q4 2022
   PM Commentary Q4 2022
   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.

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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

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 1,223 Large Blend funds as of 12/31/22.

Performance (%)

As of 1/31/233 MOYTD1 YR3 YR5 YR10 YRSince Inception
BUFFALO DIVIDEND FOCUS FUND - Investor6.285.41-2.0510.709.3512.4012.35
BUFFALO DIVIDEND FOCUS FUND - Institutional6.275.41-1.9510.879.5112.5712.52
  Russell 1000 Index5.946.70-8.559.669.3812.5113.05
  Morningstar U.S. Large-Mid Cap Index5.856.57-8.959.449.3412.4813.01
  S&P 500 Index5.766.28-8.229.889.5412.6813.18
  Morningstar Large Blend Category6.286.03-7.009.188.4211.4111.16
As of 12/31/223 MOYTD1 YR3 YR5 YR10 YRSince Inception
BUFFALO DIVIDEND FOCUS FUND - Investor8.63-8.75-8.758.799.3111.9611.87
BUFFALO DIVIDEND FOCUS FUND - Institutional8.67-8.62-8.628.969.4812.1312.04
  Russell 1000 Index7.24-19.13-19.137.359.1312.3712.44
  Morningstar U.S. Large-Mid Cap Index7.21-19.50-19.507.229.1512.3512.42
  S&P 500 Index7.56-18.11-18.117.669.4212.5612.62
  Morningstar Large Blend Category8.27-16.96-16.966.888.2611.3110.63

2013201420152016201720182019202020212022
BUFFALO DIVIDEND FOCUS FUND - Investor23.9320.810.1312.0618.02-5.0527.6616.6420.97-8.75
BUFFALO DIVIDEND FOCUS FUND - Institutional24.1220.980.2812.2318.20-4.9127.8516.8321.15-8.62
  Russell 1000 Index33.1113.240.9212.0521.69-4.7831.4320.9626.45-19.13
  Morningstar U.S. Large-Mid Cap Index33.2013.320.9211.5921.71-4.5231.6121.1126.44-19.50
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 Russell 1000 Index (As of 12/31/22)
Upside Capture83.01
Downside Capture86.76
Alpha2.07
Beta0.88
Sharpe Ratio0.42
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
2023 Distribution Dates:

Net Investment Income, if any – Record Date (3/17/23); Payment Date (3/20/23)

Net Investment Income, if any – Record Date (6/20/23); Payment Date (6/21/23)

Net Investment Income, if any – Record Date (9/18/23); Payment Date (9/19/23)

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
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 12/31/22) 
 
# of Holdings91
Median Market Cap$57.09 B
Weighted Average Market Cap$297.40 B
3-Yr Annualized Turnover Ratio13.72%
% of Holdings with Free Cash Flow67.90%
30-day SEC Yield1.82%
Top 10 Holdings
HoldingTicker / MaturitySector% of Net
Assets
MicrosoftMSFTTechnology4.13%
Viper Energy PartnersVNOMEnergy4.09%
AppleAAPLTechnology4.09%
CVS HealthCVSHealth Care2.99%
UnitedHealth GroupUNHHealth Care2.69%
VisaVFinancial Services2.19%
S&P GlobalSPGIFinancial Services2.07%
Arthur J Gallagher & CoAJGFinancial Services1.89%
Energy TransferETEnergy1.71%
Northern Oil & GasNOGEnergy1.65%
TOP 10 HOLDINGS TOTAL27.50%
As of 9/30/22. 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 12/31/22. 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 12/31/22. Market Cap percentages may not equal 100% due to rounding.

Management

Paul Dlugosch, CFA
Portfolio Manager

26 Years of Experience

 View full bio

Jeff Sitzmann, CFA
Portfolio Manager

36 Years of Experience

 View full bio

Jeff Deardorff, CFA
Portfolio Manager

26 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 12/31/22) — Capital markets rallied modestly in the 4th quarter as the S&P 500 Index gained 7.56%, the only positive quarter for 2022. Cooler inflation readings, resilient consumer spending, and better-than-expected corporate earnings buoyed markets during the first two months of the 4th quarter before pulling back in December. Much of the focus remains on the path of future interest rates, recession fears, and the economic and market impact those events may generate in 2023.

Despite the 4th quarter advance, the stock market recorded its worst calendar year since 2008, with a decline of -18.11% for the S&P 500 Index, and a loss of -32.54% for the growth-oriented and technology-heavy Nasdaq Composite Index. Large cap technology stocks and the more interest-rate sensitive assets suffered the most, while value stocks outperformed. In the end, nine of the S&P 500 Index’s 11 economic sectors declined. Energy stocks were the bright spot, recording a gain of 65.72% for the sector while Utilities eked out a gain of 1.57% in 2022.

The damage wasn’t isolated to the stock market as the investment-grade bond indices suffered double-digit losses for the year as well. In fact, a traditional balanced investment portfolio of 60% stocks and 40% bonds suffered the 4th worst drawdown in the past 100 years.

Recapping quarterly results, the broad-based Russell 3000 Index advanced 7.18% in the period. Value stocks significantly outperformed growth stocks to close out 2022, as the Russell 3000 Value Index returned 12.18% versus a return of just 2.31% for the Russell 3000 Growth Index. Relative performance was mixed going down in market cap size as small caps advanced less than large caps in the quarter, while mid cap stocks outperformed both large and small caps. Larger cap stocks returned 7.24%, as measured by the Russell 1000 Index, compared to the smaller cap Russell 2000 Index return of 6.23%, while the Russell Midcap Index produced a return of 9.18% in the quarter.

PERFORMANCE COMMENTARY
(As of 12/31/22) — The Buffalo Dividend Focus Fund (BUFDX) produced a return of 8.63% during the quarter, outperforming the Russell 1000 Index return of 7.24% and the Morningstar U.S. Large-Mid Cap Index return of 7.21%. All economic sectors generated positive returns within the Fund during the period except for Communication Services. Relative to the benchmark, all sectors delivered constructive performance except for Materials, Consumer Staples, and Industrials. Overall, the Fund’s sector allocation impact drove relative outperformance compared to the index due to our overweight in Energy, the strongest performing benchmark sector during the quarter. A portfolio underweight to Consumer Discretionary also benefited results, as that was the weakest performing benchmark sector.

Top Contributors

Specific securities that contributed most positively to performance included Horizon Therapeutics, Viper Energy Partners, and HCA Healthcare. Horizon, a manufacturer of biopharmaceuticals, climbed on buyout news that the company would be acquired by Amgen for $116.50 per share in cash. Viper Energy, which owns royalty interests in oil and gas properties in North America, gained on favorable quarterly results and a positive production forecast. HCA, the hospital and health care services provider, advanced on expectations for revenue growth and labor costs normalizing toward pre-pandemic growth trends.

Top Detractors

The top detractors from the Fund’s performance during the period were Amazon.com, Apple Inc., and Apellis Pharmaceuticals. Amazon.com., the online retailer and provider of other computing services, fell after reporting weakness in cloud computing services and forecasting slower than expected growth for holiday sales. Shares of Apple declined as production halts related to lockdowns in China due to COVID-19, combined with a weakening demand for certain Apple products. Apellis, the manufacturer and marketer of biopharmaceuticals, slumped as the company disclosed that it will submit additional data to the U.S Food & Drug Administration (FDA) for its eye disease therapy pegcetatcoplan’s new drug application.

OUTLOOK
(As of 12/31/22) — Despite the uncertainty created by the hawkish Federal Reserve 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 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
  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 5 stars among 1,223 for the 3-year period, 4 stars among 1,116 for the 5-year period, and 4 stars among 818 Large Blend funds for the 10-year period ending 12/31/22.

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.