Quick Facts
InvestorInstitutional
Ticker:BUFEXBUIEX
Inception Date:5/19/19957/1/2019
Expense Ratio:0.94%0.79%
Total Net Assets:$74.10 Million  (3/31/20)
Category:Large Cap Growth
Benchmark:Morningstar U.S. Large Growth
Related Material:
   Fund Fact Sheet Q1 2020
   PM Commentary Q1 2020
   Summary Prospectus
Fund Ojbective & Investment Process

The investment objective of the Buffalo Large Cap Fund is long-term growth of capital. The Large Cap Fund invests primarily in equity securities, consisting of domestic common and preferred stocks of large capitalization (“large-cap”) companies, that, at time of purchase by the Fund, have a market capitalization greater than $30 billion.

The Fund managers seek to identify companies for the Large Cap Fund’s portfolio 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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We don’t manage to our benchmark so we don’t have too much concentration in any one single trend. We also manage based on valuation, trimming positions when they approach their potential upside and adding to them as they get closer to the potential downside.

Alex Hancock, Portfolio Manager

Morningstar Rating

       

Overall Morningstar Rating™ of BUFEX 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 LARGE CAP FUND - Investor-5.90-4.374.9811.8310.8012.279.396.489.65
BUFFALO LARGE CAP FUND - Institutional-5.84-4.315.1712.0110.9712.449.556.649.81
  Morningstar U.S. Large Growth Index-1.442.0113.3217.6914.0214.8310.722.75-
  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 LARGE CAP FUND - Investor-15.68-15.68-3.407.998.0310.818.415.729.13
BUFFALO LARGE CAP FUND - Institutional-15.66-15.66-3.278.158.1910.988.575.889.29
  Morningstar U.S. Large Growth Index-11.51-11.512.2913.5610.8113.329.521.62-
  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
BUFEX vs Morningstar U.S. Large Growth Index (As of 3/31/20)
Upside Capture78.68
Downside Capture103.71
Alpha-4.23
Beta0.94
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). Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.

Portfolio

Portfolio Characteristics
(As of 3/31/20) 
 
# of Holdings52
Median Market Cap$55.42 B
Weighted Average Market Cap$350.84 B
3-Yr Annualized Turnover Ratio18.57%
% of Holdings with Free Cash Flow88.46%
Active Share53.32%
Top 10 Holdings
Name of HoldingTickerSector% of Net
Assets
MicrosoftMSFTTechnology7.69%
AmazonAMZNConsumer Discretionary5.11%
AppleAAPLTechnology4.25%
Alphabet (A)GOOGLTechnology4.24%
VisaVFinancial Services2.98%
CME GroupCMEFinancial Services2.49%
EquinixEQIXReal Estate2.43%
S&P GlobalSPGIFinancial Services2.16%
DanaherDHRHealth Care2.07%
Intercontinental ExchangeICEFinancial Services2.00%
TOP 10 HOLDINGS TOTAL35.42%
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

Alex Hancock, CFA
Portfolio Manager

21 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 Large Cap Fund (BUFEX) declined by 15.68% during the quarter underperforming the Morningstar U.S. Large Growth Index, which declined by 11.51%. While the effects of the global COVID-19 pandemic caused both the Fund and the Index
to decline materially during the quarter, stock selection in Consumer Discretionary and an overweight position in Industrials were key detractors of the Fund’s relative
underperformance. These sources of underperformance were offset, in part, by strength in the Real Estate sector and the portfolio’s cash balance.

The Fund ended the quarter with 52 holdings (excluding cash) representing 51 companies, down from 54 holdings representing 53 companies at the end of the previous quarter. The cash position ended the period at about 6% of assets. We initiated one new position and eliminated three holdings during the quarter.

TOP CONTRIBUTORS

Amazon was the top-contributing investment for the Fund during the quarter with shares advancing 5%. The stock proved to be a relative safe haven in the midst of the market sell-off that began in earnest in February. Demand for Amazon’s delivery services have increased sharply as consumers avoid brick-and-mortar stores. We continue to believe Amazon’s web services division should perform strongly in this environment as well.

Equinix was the next best performer for the Fund during the quarter, with the stock rising 14%. The company is the biggest provider of co-located data centers in the world, and enables customer access to networks, partners, and cloud service providers. The growth in remote-work driven by social distancing has increased demand for Equinix’s internet communication services, and we expect the company to benefit from this increased demand in coming quarters.

Biogen was also among the top contributors for the Fund as the stock returned 6% during the quarter. This pharmaceutical company generates strong free cash flow and has a relatively stable drug franchise that investors have perceived to be fairly immune from the disruptions caused by the COVID-19 outbreak. At the same time, we do expect volatility in coming quarters, driven by its drug pipeline including the potential approval of aducanumab, a treatment for Alzheimer’s disease.

TOP DETRACTORS

Schlumberger was the worst-performing investment position during the quarter. This oil and gas services company, whose business was hurt by the large decline in energy prices during the quarter, as well as COVID-19 driven operational slowdowns in its customer base. The company’s ability to maintain its dividend and the trajectory of its operating performance in coming quarters are uncertain given the difficult macro environment.

Marriott was another weak-performer for the Fund during the period. Like many travel-related consumer companies, this stock has experienced a large contraction in demand in its business due to the global evaporation of the travel industry in the second half of the quarter. While the company has taken steps to cut costs and its liquidity remains relatively strong, there is limited clarity on the exact timing of improved occupancy at its hotel properties.

OUTLOOK

(As of 3/31/20) — As we enter the 2nd quarter, the global spread of COVID-19 has carved out significant uncertainty about the direction of the global economy and large cap growth stocks. Large portions of the U.S. and European economies are closed in an attempt to contain the spread of the virus, and the timing at which they will begin to reopen is unclear. The fiscal stimulus passed by Congress in March to help individuals and businesses impacted
by virus shutdowns, and aggressive moves by the Federal Reserve to support liquidity in the financial system, are expected to soften the depth of the economic downturn the
U.S. economy is facing. With the uncertainty surrounding the exact timing and process to reopen the economy, we expect large cap stocks to stay on a path of elevated volatility,
influenced by the spread and recovery rates of COVID-19 and potential treatments or vaccines for the virus. Other factors such as data showing how consumers are impacted and behaving, and corporate earnings, which will show the extent of the damage they are seeing in their operations and balance sheets, will also be monitored closely.

Within this environment, we are managing the Fund cautiously yet opportunistically. Large cap growth stocks have declined less than some other asset classes, but we have
taken the opportunity to trim holdings whose operations are highly exposed to the economic shutdown and add to companies that are relatively more insulated. We have
also taken the opportunity to initiate new positions in several ideas where the stock price has pulled back to more appealing levels, even after accounting for near-term declines in
revenue and earnings.

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
  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 Large Cap Fund 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.