Fundamental Growth Investors
Portfolio Managers Bill Kornitzer and Nicole Kornitzer discuss how they attempt to find the most appropriate stocks to invest in from the thousands of companies worldwide, to build the Buffalo International Fund portfolio.
“Unlike many of our peers, we aren’t trying to pick stocks that are going to be the best performers in the next week or the next quarter, but trying to strive for the best long term performance on a risk adjusted basis over time.” ~ Bill Kornitzer, CFA
The Buffalo International Fund invests in companies that are primarily getting at least 50% of their revenues from abroad and their headquarters are outside the United States.
We build the portfolio from the ground up. We use the same firm-wide strategy that the other funds use here at the Buffalo Funds, which is essentially beginning with a list of secular growth trends that we’ve identified as a firm.
We are fundamental growth investors. That means we own companies that are exposed to secular growth drivers such as the substitution of capital for labor, which includes things such as robotics, automation, AI, and machine learning.
Our industry and geographical exposure is solely based upon our bottom up stock selection process. So we’re not beholden to the tight constraints around any given benchmark.
We tend to avoid heavy cyclical industries or commodity driven industries, and we focus more on consumer driven industries, healthcare, technology, some industrial companies that are in more niche segments.
Using the secular growth trends allows us really narrow down that vast universe of available securities to invest in because there are, you can imagine, tens of thousands of securities out there.
The secular growth trends allow us to identify growth that will continue out at least 5 years. And we try to find companies that are benefiting from these trends. The companies that will really continue to grow through that economic or business cycle.
Unlike many of our peers, we aren’t trying to pick stocks that are going to be the best performers in the next week or the next quarter, but trying to strive for the best long term performance on a risk adjusted basis over time.
Many would characterize our approach as growth at a reasonable price. We care about valuation and valuation analyses are a core part of our process. Our approach allows us to be patient investors and to take advantage of the increase in volatility which may occur.
Be patient. Patient to wait for the right moment to invest. Patient to wait for maybe some noise in the market that would give us an opportunity to buy at an attractive valuation.
We have hundreds of companies on our watch list and we continually re-evaluate the situation to see if valuations are appropriate for making new investments.
We love sharing new ideas, looking at companies from a different angle than we did before. Everyone on our team has a different perspective and point of view, so it’s a wonderful team dynamic.
We are making investments in companies that we believe will provide superior risk adjusted returns over the long term.
We are heavily invested alongside our other shareholders and we believe our approach is the appropriate one as an investment allocation vehicle.
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.
We construct our portfolios based on our own proprietary investment strategy.
Sticking to our disciplined investment strategy ensures we maintain a consistent, balanced approach.