Quick Facts
Inception Date:5/19/1995
Total Net Assets:$209.33 Million  (9/30/18)
Expense Ratio:0.91%
Category:Large Cap Growth
Benchmark:Morningstar U.S. Growth
Related Material:
   Fund Fact Sheet Q3 2018
   PM Commentary Q3 2018
   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.


We believe that actively investing in a relatively concentrated portfolio of great American companies will lead to superior wealth creation over time.

We look for companies that could benefit from secular market trends, combined with the ability to extend competitive advantages across borders, to serve large, profitable and fast-growing markets abroad.

Dave Carlsen, Portfolio Manager

Morningstar Rating


Overall Morningstar Rating™ based on risk-adjusted returns among 1,252 Large Growth funds as of 11/30/18.

Investment Style

Performance (%)

As of 11/30/183 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO GROWTH FUND-7.818.148.4211.0310.1514.938.969.99
  Morningstar U.S. Growth Index-8.3010.4011.2512.8212.6016.649.07-
  Russell 1000 Growth Index-7.467.758.5913.9713.0416.549.589.19
  Lipper Large Cap Growth Fund Index-7.318.218.7412.4111.5215.358.518.14
  Morningstar Large Growth Category-7.246.957.6311.6010.7614.988.798.33
As of 9/30/183 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO GROWTH FUND6.7817.8525.1016.9313.0712.4510.3310.47
  Morningstar U.S. Growth Index7.5920.5328.9519.6816.1814.0410.27-
  Russell 1000 Growth Index9.1717.0926.3020.5516.5814.3110.679.65
  Lipper Large Cap Growth Fund Index7.5617.3524.9518.9714.9612.889.608.58
  Morningstar Large Growth Category7.5415.6423.1817.6814.0212.609.848.76

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.

As of July 27, 2018 the Morningstar U.S. Growth Index has replaced the Russell 1000 Growth Index as the Fund’s primary benchmark. The Advisor believes that the new index is more appropriate given the Fund’s holdings.

3 Year Risk Metrics
vs Morningstar U.S. Growth Index (As of 9/30/18)
Upside Capture79.04
Downside Capture70.79
Sharpe Ratio1.79
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 9/30/18) 
# of Holdings58
Median Market Cap$60.22 B
Weighted Average Market Cap$265.49 B
3-Yr Annualized Turnover Ratio23.99%
% of Holdings with Free Cash Flow87.93%
Active Share59.21%
Top 10 Holdings
Name of HoldingTickerSector% of Net
AmazonAMZNConsumer Discretionary6.16%
Home DepotHDConsumer Discretionary2.15%
Align TechnologyALGNHealth Care2.05%
Baxter IntlBAXHealth Care2.00%
NikeNKEConsumer Discretionary1.97%
As of 6/30/18. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Those listed are for the previous quarter. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Sector Weighting

As of 9/30/18. 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 9/30/18. Market Cap percentages may not equal 100% due to rounding.


Clay Brethour, CFA
Portfolio Manager

26 Years of Experience

 View full bio

Dave Carlsen, CFA
Portfolio Manager

26 Years of Experience

 View full bio



(As of 9/30/18) — U.S. economic strength and solid corporate earnings growth drove healthy equity returns in the 3rd quarter. The widely-followed S&P 500 Index had a total return of 7.71%, its best quarterly gain since 2013. In September, initial jobless claims fell to the lowest level since 1969, wages grew at the fastest rate since 2009, consumer confidence reached the highest level since 2000, and the National Federation of Independent Business (NFIB) survey of small business optimism was at an all-time high (the survey dates back to 1974). Against this strong economic backdrop, the Federal Reserve raised the targeted federal funds rate by another 25 basis points to a range of 2.00% to 2.25%. Slowly rising interest rates led to flat bond returns.

The divergence between domestic and international equity market performance continued during the quarter, with the MSCI EAFE Index advancing just 1.35%. The Russell 3000 Index gained 7.12% in the 3rd quarter. By style, growth continued to outperform value, with the Russell 3000 Growth Index increasing 8.88% compared to the Russell 3000 Value Index’s advance of 5.39%. Large caps did better than small caps as the Russell 1000 Index returned 7.42%, the Russell Midcap Index returned 5.00%, and the Russell 2000 Index returned 3.58% in the quarter. Every economic sector was positive this quarter, with Health Care and Industrials the top performers, while Materials and Energy lagged the indexes.


(As of 9/30/18) — The Buffalo Growth Fund gained 6.78% during the quarter, trailing the benchmark Morningstar U.S. Growth Index return of 7.59%. Weak stock selection within Health Care, Industrials, and Consumer Discretionary weighed on relative performance during the period. While Health Care was the best performing benchmark sector during the quarter, we experienced two stock specific setbacks that negatively influenced near term results. Within Industrials and Consumer Discretionary, rising input costs, higher interest rates, and trade fears more generally hampered results. Elsewhere, positive stock selection in Information Technology and a significant underweight in Energy, the worst performing benchmark sector during the quarter, were positive offsetting factors.

The Fund continues to invest in high-quality growth stocks with relatively attractive valuations, which we believe should be a key driver of above-index risk-adjusted returns over the long term.

Amazon shares increased nearly 18% during the quarter, making it the biggest contributor to the Fund’s return. The company continued to grow revenue in excess of expectations with strength across its various businesses including ecommerce and Web Services. Investors believe the company has a long runway to continue to gain share at the expense of many traditional businesses.

Microsoft was another strong performer during the quarter. The company reported strong results in Intelligent Cloud and Personal Computing, and appears poised for strong performance in these business lines in coming quarters.

Detracting from performance was Portola Pharmaceuticals, which declined 29% during the quarter. The company’s shares sold off after lowering investor expectations for sales of its drug Bevyxxa for the treatment of thrombosis. The near-term outlook for another of the company’s drugs Andexxa (for treatment of uncontrolled bleeding) remains stronger but the company has to overcome recent execution challenges to rerate higher.

Nevro Corp. shares experienced price volatility and a steep decline due to heightened patent litigation challenges and a disappointing sales forecast caused by ongoing sales force attrition and productivity issues. The patents have since been upheld, demonstrating product viability but leaving the ongoing sales execution issue a multi-quarter fix, much to the chagrin of short-term oriented Wall Street analysts.


(As of 9/30/18) — The market environment for equities remains favorable. Interest rates, inflation, and unemployment remain low, while corporate earnings grind higher buoyed by improving consumer confidence and recent U.S. corporate tax reform. Growing cash flows combined with foreign cash repatriation should drive improved business investment and more aggressive capital allocation activity including mergers and acquisitions (M&A), buybacks, and dividend increases.

As the U.S. economy continues to strengthen amid a tighter labor market, it could put upward pressure on further rate increases, as the Fed continues its interest rate normalization process after many years of easy money policies. A more restrictive monetary policy could introduce increased volatility. Additional uncertainty could be driven by other factors including: (i) the upcoming midterm elections in November and possible Democratic gains in the Congress; (ii) the ultimate outcome of the trade disputes and the impact it will have on earnings of U.S.-based companies expanding internationally; (iii) the fact that many stocks are trading at elevated valuations after the multi-year bull market.

Economic conditions may ebb and flow. However, our focus for the Growth Fund is to invest in secular trend stars – 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.

As volatility picks up, a steady hand and active management with an eye toward quality and relatively-attractive risk-adjusted returns could hold advantage over passive money strategies. We stand poised to capitalize where we see near term stock price volatility that presents an opportunity to improve risk-adjusted expected returns within the portfolio.

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.

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 received 3 stars among 1252 for the three-year, 3 stars among 1115 for the five-year, and 3 stars among 804 Large Growth funds for the ten-year period ending 11/30/18.

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. ©2018 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.