Quick Facts

(As of 3/31/17)


Inception Date
  December 17th, 2001

Total Fund Assets
  $395.4 M

Expense Ratio

Benchmark Index
  Russell Midcap Growth


Overall Morningstar™ rating out of 580 Mid-cap Growth funds as of 3-31-2017 (derived from a weighted average of the fund’s three-, five-, and ten-year risk adjusted return measure, if applicable).


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.




Investment Strategy

The investment objective of the Buffalo Mid Cap Fund is long-term growth of capital. The Mid Cap Fund normally invests at least 80% of its net assets in equity securities, consisting of domestic common stocks and preferred stocks of medium capitalization (“mid-cap”) companies — companies, at the time of purchase, with market caps within the range of the Russell Midcap® Growth Index ($1.1 billion to $28.6 billion, as of 6/30/16).


Our focus has always been on investing in secular growth companies we believe are attractively-priced with strong balance sheets. We remain convinced the inefficiencies inherent in the small and mid-cap market spectrum, in addition to where we are in the economic cycle, are best suited for disciplined, active management of the portfolio.

~ Robert Male, Portfolio Manager

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(As of 3/31/17)3 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
Buffalo Mid Cap Fund4.604.6012.944.378.356.787.847.77
Russell Midcap Growth Index6.896.8914.077.8811.958.138.578.37
Lipper Mid Cap Growth Index8.018.0116.556.5610.557.657.677.45
Morningstar Mid-Cap Growth7.307.3015.586.0610.307.127.58-
Each Morningstar category average represents a universe of funds with similar objectives.
(As of 3/31/17)3 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
Buffalo Mid Cap Fund4.604.6012.944.378.356.787.847.77
Russell Midcap Growth Index6.896.8914.077.8811.958.138.578.37
Lipper Mid Cap Growth Index8.018.0116.556.5610.557.657.677.45
Morningstar Mid-Cap Growth7.307.3015.586.0610.307.127.58-
Each Morningstar category average represents a universe of funds with similar objectives.
YearBuffalo Mid Cap FundRussell Midcap Growth IndexMorningstar Mid-Cap Growth Category
Each Morningstar category average represents a universe of funds with similar objectives.
(As of 3/31/17)
vs Russell Midcap Growth Index
Upside Capture90.58
Downside Capture112.03
Standard Deviation12.38
Sharpe Ratio0.34

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.

Growth of $10k

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.


(As of 3/31/17)
# of Holdings82
Median Market Cap$9.02 B
Weighted Average Market Cap$12.73 B
3-Yr Annualized Turnover Ratio33.19%
% of Holdings with Free Cash Flow81.93%
% of Holdings with No Net Debt32.53%
Active Share80.56%
HoldingTickerSector% of Portfolio
Harman Industrial Industries HARTechnology2.73%
WhiteWave Foods WWAVConsumer Staples2.45%
Kansas City Southern KSUIndustrials2.32%
Equinix EQIXReal Estate2.26%
CME Group CMEFinancial Services2.24%
Verisk Analytics VRSKIndustrials2.19%
Tractor Supply TSCOConsumer Discretionary2.08%
Air Products & Chemicals XNYSMaterials2.05%
Nielsen Holdings NLSNIndustrials2.01%
FMC FMCMaterials1.92%
View Full Holdings

As of 12/31/16. 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.

Buffalo publishes this listing of securities held as of the most recent calendar-quarter end, with a 30 or 60 day lag depending on the portfolio. Buffalo may exclude any portion of holdings from publication when deemed in the best interest of the portfolio.

The portfolio data and its presentation here may differ from the complete schedules of investments in regulatory filings due to differing accounting and reporting requirements.

As of 3/31/17. 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.

As of 3/31/17. Market Cap percentages may not equal 100% due to rounding.



Capital markets got off to a volatile start in 2016 with the Russell 3000 Index dropping over 11% and West Texas Intermediate (WTI) Crude Oil down almost 30% by mid-February. Concerns about soft Chinese economic growth contributed to equity market weakness early in the year, and the energy complex was struggling to resolve its oversupplied condition. Meanwhile, perceived “safe-haven” assets performed strongly as U.S. 10-year Treasury notes advanced and gold appreciated over 15% during the same time frame. Economic concerns and a falling stock market led the Federal Reserve to adopt a less aggressive stance toward interest rate increases, and falling crude production eventually calmed fears of oversupply. These drivers led to a rebound in prices of both equities and crude oil and began a period of steadily rising prices and declining volatility that would continue from mid-February through the end of the year with only minor interruption. Interestingly, perceived ”safe-haven” assets continued to perform strongly as gold and U.S. Treasuries rallied alongside equities into the summer and largely held those gains into the fall. The fourth quarter of 2016 began with this uneasy disequilibrium still largely intact, but sentiment changed dramatically with Donald Trump’s surprise election victory on November 8th. The election outcome created expectations of pro-growth policies and deregulation that drove accelerating gains in stock prices, higher interest rates and associated declines in the prices of both Treasury bonds and gold, all of which generally persisted through the end of 2016.


The Russell 3000 Index returned 12.74% for the full year. The Russell 3000 Value Index outperformed the Russell 3000 Growth Index by 11.01% during the year, and smaller-capitalization indices such as the Russell Microcap Index, the Russell 2000 Index and the Russell Midcap Index outperformed the large-capitalization Russell 1000 Index by 8.31%, 9.25% and 1.74%, respectively. Much of the outperformance of value stocks can be attributed to the strong performance of the energy sector. Outperformance of small-capitalization stocks was reflective of investor aversion to greater international exposure of larger companies in the face of a rising dollar, as well as increasingly optimistic expectations for the domestic economy and for a lower U.S. corporate tax rate following the election. For the year, Energy and Materials were the best performing sectors in the Russell 3000 Index as expectations for infrastructure investment and increasing investor risk appetite following the election contributed to the reversal of prior-year underperformance that was already underway. Health Care was the worst performing sector for the year, as concerns about political backlash against rising drug prices contributed to declines in Pharmaceutical & Biotech stocks.

For the fourth quarter, the Russell 3000 Index returned 4.21%. The Russell 3000 Value Index outperformed the Russell 3000 Growth Index by 6.04% during the quarter while smaller-capitalization indices such as the Russell Microcap Index and the Russell 2000 Index outperformed the large-capitalization Russell 1000 Index by 6.22% and 5.00%, respectively. The Russell Midcap Index of mid-sized companies underperformed the Russell 1000 Index by 0.62% in the fourth quarter and was the lone exception to the trend of small outperforming large. Outperformance of more cyclically sensitive value stocks and small capitalization stocks reflected some of the same drivers that were in place earlier in the year, as well as increasingly optimistic expectations for economic growth, higher interest rates and expectations of a lower corporate tax rate in the U.S. following the election. Financial Services was the best performing sector in the fourth quarter, benefiting from higher interest rates and expectations for a less adversarial regulatory regime under the new Republican administration. The flip-side of greater risk appetite was less demand for stable, “bond-like” equities which was reflected in the lower-risk Consumer Staples sector performing poorly during the quarter. Political risk continued to put pressure on the Health Care sector, as uncertainty regarding potential for drug price regulation and repeal of the Affordable Care Act contributed to Health Care being the worst performing sector during the quarter.

The Russell 1000 Growth Index appreciated 1.01% in the fourth quarter of calendar 2016 outperforming the Buffalo Large Cap Fund which returned -0.62%. Sector allocation was a modest negative in the quarter fueled by an overweight of healthcare. Stock selection was largely responsible for the relative underperformance and was attributable to our healthcare holdings, specifically biotechnology.

Top contributors in the period were Micron Technologies, Harman International and Marriott International. Micron offers semiconductor memory products. We added the stock to the portfolio late in 2015 anticipating overcapacity issues would resolve and pricing would stabilize, both of which have come to pass. The company solidly beat its guidance and communicated an upbeat forecast in its most recent quarterly report. Harman International’s stock appreciated upon the announcement that Samsung Electronics would acquire the company in an all cash deal at $112 per share, a 29% premium. Marriott International’s equity ascended in anticipation of better than originally expected synergies in connection with its acquisition of Starwood Hotels, a deal which closed in the third quarter of calendar year 2016.

Top detractors in the period were Amazon, Alnylam Pharmaceuticals and Cerner. Amazon’s third quarter earnings’ report fell short of expectations due to higher spending. The fourth quarter outlook also fell short of expectations. The stock sold off after the report, but we believe the long term prospects of the company remain bright. Alnylam, a biotechnology company, halted development of a drug in a late stage clinical trial. While Alnylam has a prolific pipeline, this setback was meaningful and warranted a pullback in the stock. Cerner provides information technology software tools to hospitals. Cerner’s growth has slowed this past year. In addition, President-elect Trump has affirmed he will repeal Obamacare leaving many hospitals uncertain of their future and reluctant to invest. As a result the near term prospects for Cerner’s business are challenged. Yet over the intermediate to long term, we believe the Cerner’s growth profile is attractive and the company’s products will prove critical to hospitals in managing costs and improving health outcomes.

The fund ended the calendar year with 44 holdings representing 43 companies, as we hold both the Class A and Class C shares of Alphabet (formerly Google). We exited one positions in the fourth quarter, and added three new stocks to the Fund, two industrial holdings and one information technology stock.


The U.S. economy ended 2016 on a strong note, with real gross domestic product growth strengthening, unemployment below 5% and consumer confidence reaching a multi-year high. Donald Trump’s cabinet nominees and White House staff appointments are decidedly pro-business, with many having been drawn from the corporate sector as opposed to government service. Enthusiasm over corporate tax reform, decreased regulation, repatriation, investment in infrastructure and defense are just some of the themes driving the market higher. As interest rates increased in the fourth quarter, capital rotated out of fixed income into equities. With several more rate hikes planned in 2017, we expect this rotation to continue.

This setup bodes well for U.S. equity markets looking forward. Nevertheless we believe that change will take time. The S&P 500 Index appreciated almost 5% from 11/08/16, the date of the U.S. presidential election, through year end 2016. We are being thoughtful about the future and considering which policies and legislation will be enacted over the next few years and the impact those changes will have on our universe of stocks that can be beneficiaries of the Buffalo Secular Growth Trends. While we strive to invest in companies that will thrive in any political environment, we also acknowledge that a significant change in leadership has occurred and aim to better position the portfolio to benefit from this change, while being mindful of valuations. Consequently we await a pullback to solidify this repositioning, and believe this opportunity will occur as the current state of euphoria gives way to the uncertainty inherent in the political process.

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. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any security.

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.

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The Morningstar RatingTM 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 RatingTM 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 Mid Cap Fund received 2 stars among 580 for the three-year, 2 stars among 500 for the five-year, and 3 stars among 368 Mid-Cap Growth category funds for the ten-year period ended 3/31/17.

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