Quick Facts
InvestorInstitutional
Ticker:BUFGXBIIGX
Inception Date:5/19/19957/1/2019
Expense Ratio:0.93%0.79%
Total Net Assets:$198.46 Million  (3/31/21)
Category:Large Cap Growth
Benchmark:Morningstar U.S. Growth
Related Material:
   Fund Fact Sheet Q4 2020
   PM Commentary Q4 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 1,186 Large Growth funds as of 3/31/21.

Investment Style

Performance (%)

As of 3/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
(5/19/95)
BUFFALO GROWTH FUND - Investor0.810.8153.9818.75
17.0913.6311.019.3011.01
BUFFALO GROWTH FUND - Institutional0.840.8454.2618.9317.2613.8011.189.4611.18
  Morningstar U.S. Growth Index0.610.6164.4523.9121.8116.7012.129.01-
  Lipper Large Cap Growth Fund Index1.571.5762.6922.0320.9715.4411.098.509.68
  Morningstar Large Growth Category2.232.2363.5720.4419.4214.7310.969.079.69
As of 3/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
(5/19/95)
BUFFALO GROWTH FUND - Investor0.810.8153.9818.75
17.0913.6311.019.3011.01
BUFFALO GROWTH FUND - Institutional0.840.8454.2618.9317.2613.8011.189.4611.18
  Morningstar U.S. Growth Index0.610.6164.4523.9121.8116.7012.129.01-
  Lipper Large Cap Growth Fund Index1.571.5762.6922.0320.9715.4411.098.509.68
  Morningstar Large Growth Category2.232.2363.5720.4419.4214.7310.969.079.69
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 12/31/20)
Upside Capture81.74
Downside Capture100.90
Alpha-3.21
Beta0.92
Sharpe Ratio0.95
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 12/31/20) 
 
# of Holdings54
Median Market Cap$96.07 B
Weighted Average Market Cap$571.23 B
3-Yr Annualized Turnover Ratio26.58%
% of Holdings with Free Cash Flow92.59%
Active Share56.86%
Top 10 Holdings
Name of HoldingTickerSector% of Net
Assets
MicrosoftMSFTTechnology10.15%
AmazonAMZNConsumer Discretionary6.92%
AppleAAPLTechnology5.85%
MastercardMAFinancials3.30%
Alphabet (C)GOOGTechnology2.99%
FacebookFBTechnology2.97%
Home DepotHDConsumer Discretionary2.81%
Alphabet (A)GOOGLTechnology2.50%
NikeNKEConsumer Discretionary2.38%
LindeLINMaterials2.29%
TOP 10 HOLDINGS TOTAL42.16%
As of 9/30/20. 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 12/31/20. 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 12/31/20. Market Cap percentages may not equal 100% due to rounding.

Management

Dave Carlsen, CFA
Portfolio Manager

29 Years of Experience

 View full bio

Josh West, CFA
Portfolio Manager

16 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 12/31/20) — Equity markets extended their rally in the 4th quarter, with the S&P 500 Index returning 12.15%. This capped the end to a historic year in which the S&P advanced 18.40% despite the world suffering through a global pandemic. The biggest news in the quarter was the U.S. Food and Drug Administration’s (FDA) approval of two separate vaccines, following very encouraging clinical results. This helped investors look beyond worsening COVID-19 trends and provided hope that an end to the pandemic could be in sight.

The Russell 3000 Index increased 14.68% in the quarter. Value stocks led the advance, as the Russell 3000 Value Index advanced 17.21% compared to the Russell 3000 Growth Index return of 12.41% during the period. Relative performance was inversely correlated by market cap in the quarter (i.e., small caps outperformed big caps). The Russell 1000 Index delivered a return of 13.69% compared to the Russell Mid Cap Index return of 19.91%. Smaller market cap indexes surged even more as the Russell 2000 Index returned 31.37% and the Russell Micro Cap Index returned 31.39%. Cyclically-sensitive sectors such as Energy, Financials, Industrials, and Materials performed best in the quarter. The more defensive areas like Telecom Services, Consumer Staples, Utilities, and Healthcare lagged. All sectors produced positive absolute results.

PERFORMANCE COMMENTARY

(As of 12/31/20) — The Buffalo Growth Fund (BUFGX) gained 12.08% in the 4th quarter, which was slightly behind the Morningstar U.S. Growth Index’s gain of 12.66%. The largest contributors to relative performance came from stock selection in the Information Technology sector and the Fund’s overweight position in the Industrial sector. Once again, the largest headwind to relative performance came from our decision not to own Tesla, Inc., which was up 64% in the quarter (accounting for a 130 basis point relative drag). As of this writing, Tesla’s market capitalization is larger than the market cap of GM, Ford, Toyota, Daimler, Volkswagen, and Fiat Chrysler… combined. It is somewhat interesting that Tesla is only able to report a profit by selling regulatory credits to those automakers. We do not expect Tesla to advance another 740% again this year, and we believe the headlines for Tesla’s stock performance will decrease significantly in the future.

TOP CONTRIBUTORS

The Walt Disney Company (DIS) was the top contributor in the quarter. In November, Disney reported earnings that were ahead of analyst estimates, driven largely by their streaming business. Later in the quarter, the company hosted a very bullish analyst day. The company is adding subscribers to its Disney+ streaming service at a faster rate than expected, and they will be implementing a price increase ahead of expectations.

Apple (AAPL) was another top contributor in the quarter. The company’s iPad and Mac products continue to benefit from work from home trends. Investors were also optimistic about the company’s opportunity to benefit from the 5G upgrade cycle and longer term aspirations involving electric vehicles.

TOP DETRACTORS

Salesforce.com (CRM) was the largest detractor in the quarter. Although the company reported better-than-expected earnings, new billings were a disappointment. The company also announced the acquisition of Slack Technologies and the surprise retirement of their CFO. While the acquisition makes strategic sense, most investors viewed the price to be too expensive.

S&P Global, Inc. (SPGI) reported a beat and raise quarter, but investors were more focused on the outlook for the ratings business in 2021. Bond issuance is expected to be down modestly in 2021 against a tough 2020 comparison. S&P also announced the acquisition of IHS Markit during the quarter. While the premium paid was small compared to the outlook for synergies, some investors have questioned the strategic fit.

OUTLOOK

(As of 12/31/20) — The last nine months of 2020 has been an extremely volatile period, and given the market’s quick rebound despite a slower economy, lower earnings, political uncertainty, and continued COVID-19 concerns, a lot rests on the trajectory of earnings recovery in 2021. With Democrats controlling both the legislative and executive branches, we expect more stimulus spending as well as higher taxes and increased regulation. In addition, fiscal and monetary policy remain extremely accommodative worldwide, with activity levels rebounding across countries and sectors. The economy is mending. Consumer and business confidence are rising too, as the world has found innovative ways to adapt, progress, and grow despite the one-hundred-year pandemic in our midst.

We are mindful that investors may have bid up certain high growth stocks to unsustainable valuations, and we continue to focus on both the downside risk and the upside opportunity for stocks in the portfolio. The disparity in returns between Growth and Value has been extreme this year, and at some point, there could be a meaningful reversion to the mean. Going forward, we think lower political uncertainty and the rollout of COVID-19 vaccines could steepen the yield curve. This should be positive for more economically-sensitive areas at the expense of over-priced growth stocks, and we are adjusting the portfolio accordingly.

We will continue to invest in businesses with solid growth opportunities, durable competitive advantages, scalable business models, and good management teams, when they are trading at attractive valuations, in our opinion.

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
  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 1,186 for the 3-year, 2 stars among 1,065 for the 5-year, and 2 stars among 788 Large Growth funds for the 10-year period ending 3/31/21.

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. ©2021 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.