Quick Facts
InvestorInstitutional
Ticker:BUFGXBIIGX
Inception Date:5/19/19957/1/2019
Expense Ratio:0.92%0.77%
Total Net Assets:$148.50 Million  (3/31/20)
Category:Large Cap Growth
Benchmark:Morningstar U.S. Growth
Related Material:
   Fund Fact Sheet Q1 2020
   PM Commentary Q1 2020
   Summary Prospectus
Fund Objective & Investment Process

The investment objective of the Buffalo Growth Fund is long-term growth of capital. The Growth Fund invests in domestic common stocks and other U.S. equity securities, including preferred stock, convertible securities, warrants and rights, with a goal of maintaining at least 75% of the equity weighting of the Fund’s portfolio in companies with market capitalizations greater than $5 billion or the median of the Morningstar U.S. Growth Index, whichever is lower. Capitalization of the Morningstar U.S. Growth Index changes due to market conditions and index composition.

With respect to the remaining 25% of the equity weighting of the Fund’s portfolio, the Fund may invest in companies of any size, including, but not limited to, those with market capitalizations less than the lower of the median of the Morningstar U.S. Growth Index or $5 billion.

The Fund managers seek to identify companies that are expected to 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 are screened using in-depth, in-house research to identify those which the managers believe have favorable attributes, including attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.

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The Growth Fund invest in secular trend leaders: attractively-priced, financially-strong, well-managed companies across all market cap segments, which we believe are favorably positioned to harvest the lion’s share of big secular growth trends.

Dave Carlsen, CFA, Co-Portfolio Manager

Morningstar Rating

       

Overall Morningstar Rating™ of BUFGX based on risk-adjusted returns among 1,237 Large Growth funds as of 4/30/20.

Investment Style

Performance (%)

As of 4/30/203 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
(5/19/95)
BUFFALO GROWTH FUND - Investor-5.88-4.164.2112.28
9.6811.949.836.5410.11
BUFFALO GROWTH FUND - Institutional-5.84-4.124.3612.449.8412.119.996.7010.27
  Morningstar U.S. Growth Index-0.642.6812.8517.3313.3814.4610.863.65-
  Lipper Large Cap Growth Fund Index-2.95-0.699.3515.3312.3113.009.744.168.52
  Morningstar Large Growth Category-5.24-3.485.3412.7210.5112.289.555.438.49
As of 3/31/203 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
(5/19/95)
BUFFALO GROWTH FUND - Investor-16.01-16.01-3.908.17
7.2010.828.815.799.56
BUFFALO GROWTH FUND - Institutional-16.01-16.01-3.798.327.3510.988.975.959.72
  Morningstar U.S. Growth Index-11.50-11.501.4512.809.9712.969.542.49-
  Lipper Large Cap Growth Fund Index-13.47-13.47-0.5511.219.2611.578.573.037.95
  Morningstar Large Growth Category-15.48-15.48-3.728.657.6410.998.404.427.95
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
BUFGX vs Morningstar U.S. Growth Index (As of 3/31/20)
Upside Capture79.93
Downside Capture100.70
Alpha-3.38
Beta0.93
Sharpe Ratio0.43
Hypothetical Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the inception date of the benchmark index (6/30/97). This chart does not imply future performance.

Portfolio

Portfolio Characteristics
(As of 3/31/20) 
 
# of Holdings55
Median Market Cap$57.44 B
Weighted Average Market Cap$299.26 B
3-Yr Annualized Turnover Ratio26.81%
% of Holdings with Free Cash Flow89.09%
Active Share55.98%
Top 10 Holdings
Name of HoldingTickerSector% of Net
Assets
MicrosoftMSFTTechnology6.53%
AmazonAMZNConsumer Discretionary3.63%
MastercardMAFinancials2.95%
Alphabet (C)GOOGTechnology2.94%
Abbott LabsABTHealth Care2.73%
AppleAAPLTechnology2.73%
AlphabetGOOGLTechnology2.63%
LindeLINMaterials2.54%
Danaher CorpDHRHealth Care2.32%
NikeNKEConsumer Discretionary2.26%
TOP 10 HOLDINGS TOTAL28.53%
As of 12/31/19. 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 3/31/20. 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 3/31/20. Market Cap percentages may not equal 100% due to rounding.

Management

Dave Carlsen, CFA
Portfolio Manager

27 Years of Experience

 View full bio

Josh West, CFA
Portfolio Manager

15 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 3/31/20) — Global equity markets fell sharply in the 1st quarter of 2020 in reaction to the global spread of COVID-19. As the case count increased exponentially, the only effective response was for countries to go into lockdown. The economic impact of these actions became clear as the quarter progressed and virtually all asset classes suffered as a result. From February 19 through March 23, the U.S. stock market, as measured by the S&P 500 Index, declined around 34%, which was the fastest meltdown in history. Central banks and governments responded quickly to this event, with the U.S. Federal Reserve (the “Fed”) cutting interest rates twice in March and announcing unlimited quantitative easing. The U.S. Senate passed a $2 trillion stimulus package, providing assistance to individuals and businesses in distress. Optimism around these efforts helped the market rally into quarter end, leaving the S&P 500 Index down 19.60% from the start of the year.

The broad market Russell 3000 Index declined 20.90% in the 1st quarter. Growth outperformed value, with the Russell 3000 Growth Index declining 14.85% compared to the Russell 3000 Value Index decline of 27.32%. By capitalization size, large cap stocks held up best, with a -20.22% return in the quarter, represented by the Russell 1000 Index. The Russell Mid Cap Index fell -27.07%, followed by the smaller cap Russell 2000 Index which declined -30.61%. Best performing sectors were the Technology, Health Care, and Consumer Staples sectors. The Energy sector was hit hardest as falling demand and rising supply from Saudi Arabia caused oil prices to crater. The economically-sensitive Financial and Industrial sectors were also among the worst performing sectors in the quarter.

PERFORMANCE COMMENTARY

(As of 3/31/20) — The Buffalo Growth Fund (BUFGX) declined 16.01% versus the Morningstar U.S. Growth Index’s decline of 11.50% and the Morningstar Large Cap Growth Peer Group decline of 15.48%. The Consumer Discretionary, Technology, Financials, and Health Care sectors in the Fund accounted for most of the relative underperformance. Cyclically-dependent stocks performed worst in the Fund and Index. Consumer Discretionary and Information Technology stocks were particularly hard hit, as the coronavirus pandemic brought the world economy to a standstill.

TOP CONTRIBUTORS

Amazon continues to have significant runway for growth as it continues to find ways to evolve its business model.

Equinix is the largest provider of colocation data centers in the world. While the company reported a strong quarter in February, the increased reliance of remote connectivity for work and school played a strong role in company’s stock price performance during the quarter. The company continues to be well position for secular growth going forward as more software services move to the cloud. Additionally, the company has developed network-dense locations in major cities that would be extremely difficult for competitors to replicate.

TOP DETRACTORS

Disney has been negatively impacted by the global pandemic, which is keeping Disney’s theme parks, resorts, retail stores, global theatrical exhibition, and live sports
broadcasts largely closed or postponed through the end of June 2020. While it is unknown how long the COVID-19 pandemic will last, Disney’s portfolio of offerings are unreplaceable brands. In early April, Disney reported 50 million subscribers to its Disney+ streaming products, as consumers sought entertainment content while sheltering at home. We believe that once the economy “normalizes”, Disney’s stock price will continue to recover from its recent lows.

Wells Fargo, one of the largest banks in the U.S., declined largely due to the impact of the COVID-19 pandemic on the global economy and lower interest rates, as the Fed cut its benchmark lending rate to zero during the quarter. Despite the difficult near-term environment, the company remains profitable and should maintain adequate capital levels, even after modeling for the Fed’s severely adverse stress test in a worst case scenario. We are monitoring developments closely, but current valuation of the company’s stock makes a relatively compelling risk-reward trade-off longer term.

OUTLOOK

(As of 3/31/20) — The fiscal and monetary response to the COVID-19 pandemic has been relatively swift and expansive, with indications that if conditions do not improve, world leaders and global central banks will do whatever is necessary to revive growth. Their efforts so far are encouraging and markets have begun to stabilize. In the near term, everyone seems focused on the pace and magnitude of the virus spread, resulting in high stock
correlations. Upcoming earnings results seem far less important than an assessment of 2021-2022 earnings power. Over the intermediate term, the revival of global growth
will depend on how soon the pandemic can be contained through a combination of better testing, improved therapies, vaccine development, and maybe seasonal curtailment. Time will tell.

In the meantime, global economic uncertainty and low investor confidence are weighing on the market and near-term corporate fundamentals. This is opening up attractive buying opportunities for some of our favorite secular growth beneficiaries on the wish list. We are not blindly buying on lower stock prices, but instead we are mindful of the macroeconomic backdrop, the sensitivity of our companies to
discretionary spending and the negative effect unfavorable leverage can have on corporate profit cycles in bad-times scenarios. We keep a keen eye on the degree of contraction that current prices discount and the degree to which management teams can protect profits and shed risk. Our work is beginning to tell us that reward and growing upside opportunity trumps downside risk in many instances. We are patiently waiting for these good-odds situations and will strike when we get them.

Economic conditions may ebb and flow, but our focus is steady – to invest in attractively-priced, financially-strong, well-managed companies that can benefit from innovative strategies and disruptive megatrends.

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.

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 Growth Fund (BUFGX) received 3 stars among 1,237 for the 3-year, 3 stars among 1,084 for the 5-year, and 3 stars among 813 Large Growth funds for the 10-year period ending 4/30/20.

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.