Quick Facts
Inception Date:4/14/1998
Total Net Assets:$428.03 Million  (12/31/18)
Expense Ratio:1.01%
Category:Small Cap Growth
Benchmark:Morningstar U.S. Small Growth
Related Material:
   Fund Fact Sheet Q4 2018
   PM Commentary Q4 2018
   Summary Prospectus

For a full transcript of this video, click here.

Finding Premier Growth Companies

Portfolio Managers Jamie Cuellar and Bob Male discuss how their approach to finding companies, that are rapidly growing and benefit from long term trends, is the foundation for the Buffalo Small Cap Fund investment strategy.

“I think what really differentiates us is our process, where we combine the top-down work of looking at trends provided with the bottoms-up fundamental research we do on each company.”
  ~ Jamie Cuellar, CFA

Morningstar Rating


Overall Morningstar Rating™ based on risk-adjusted returns among 585 Small Growth funds as of 1/31/19.

Investment Style

Fund Objective & Investment Strategy

The investment objective of the Buffalo Small Cap Fund is long-term growth of capital. The Fund normally invests at least 80% of its net assets in equity securities, consisting of domestic common stocks and preferred stocks, of small capitalization (“small-cap”) companies — companies, at the time of purchase, with market capitalizations within the range of the Morningstar U.S. Small Growth Index.

The Fund managers seek to identify companies for the Small 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 attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.


An actively-managed portfolio of smaller-capitalization, rapidly-growing companies that can benefit from positive, long-term trends remains an excellent way to exploit an inefficient market.

Bob Male, Portfolio Manager

Featured Articles & Reports

Performance (%)

As of 1/31/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO SMALL CAP FUND-0.6413.523.8417.195.9713.668.4811.30
  Morningstar U.S. Small Growth Index1.4612.712.2317.388.6916.248.595.94
  Russell 2000 Growth Index0.0611.55-2.6315.557.8315.688.385.91
  Lipper Small Cap Growth Fund Index0.6711.722.5016.998.3015.637.816.80
  Morningstar Small Growth Category-0.2211.371.1316.297.9315.538.407.12
As of 12/31/183 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO SMALL CAP FUND-24.60-5.78-5.788.342.5711.618.0210.67
  Morningstar U.S. Small Growth Index-21.44-5.67-5.678.575.5313.898.145.35
  Russell 2000 Growth Index-21.65-9.31-9.317.245.1313.527.965.38
  Lipper Small Cap Growth Fund Index-20.46-3.92-3.929.055.5113.557.346.24
  Morningstar Small Growth Category-20.82-5.76-5.768.475.1213.367.906.60

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. Small Growth Index has replaced the Russell 2000 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. Small Growth Index (As of 12/31/18)
Upside Capture102.27
Downside Capture103.03
Sharpe Ratio0.41
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 12/31/18) 
# of Holdings75
Median Market Cap$2.02 B
Weighted Average Market Cap$2.43 B
3-Yr Annualized Turnover Ratio51.30%
% of Holdings with Free Cash Flow61.33%
% of Holdings with No Net Debt46.67%
Active Share89.44%
Top 10 Holdings
Name of HoldingTickerSector% of Net
The Trade DeskTTDTechnology2.28%
HMS HoldingsHMSYIndustrials2.28%
Bio TechneTECHHealth Care2.11%
Dave & Busters EntertainmentPLAYConsumer Discretionary1.98%
CyrusOneCONEReal Estate1.95%
CoreCivicCXWReal Estate1.92%
HealthEquityHQYHealth Care1.91%
Exact SciencesEXASHealth Care1.91%
As of 9/30/18. 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 12/31/18. 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 12/31/18. Market Cap percentages may not equal 100% due to rounding.


Jamie Cuellar, CFA
Portfolio Manager

27 Years of Experience

 View full bio

Bob Male, CFA
Portfolio Manager

33 Years of Experience

 View full bio

Alex Hancock, CFA
Portfolio Manager

21 Years of Experience

 View full bio



(As of 12/31/18) — The 4th quarter of 2018 was a rough period for equity markets, with steep declines dragging full year returns into negative territory. The S&P 500 Index declined -13.52% during the quarter, driven by fears of tightening monetary policy, escalating trade tensions, slowing global economic growth, and margin pressure from higher labor and freight costs. Investors sought safety in government bonds, driving the yield on the 10-year Treasury down from 3.06% at the end of the 3rd quarter to 2.68% at the end of the 4th quarter.

In a reversal of the year-to-date trend, value outperformed growth in the period, as the Russell 3000 Value Index declined -12.24% compared to a -16.33% drop in the Russell 3000 Growth Index. Large companies held up better than smaller companies during the quarter, as the Russell 1000 Index fell -13.82%, the Russell Midcap Index was down -15.37%, and the small cap Russell 2000 Index was down -20.20%. The only sector to post a positive return in the 4th quarter was Utilities. Real Estate, Consumer Staples, and Health Care were down but outperformed the market. Energy was the worst performing sector, driven by steep declines in crude oil. Technology, Industrials, and Consumer Discretionary also underperformed the broad market.


(As of 12/31/18) — There were very few safe havens for small caps in the 4th quarter, as the asset class went from being a beneficiary of investor dollars due to having less international exposure during a period of trade wars… to the victim of a risk-off trade caused by all of the issues listed above. Furthermore, tax loss selling also forced some stocks to trade significantly lower during a period of low liquidity at year-end. Companies with higher debt levels and high growth stocks underperformed as one might expect, but surprisingly, lower valuation stocks did not outperform higher valuation stocks during the quarter.

The Buffalo Small Cap Fund declined -24.60% during the quarter versus the Morningstar U.S. Small Growth Index’s decline of -21.44%, and ended the year just about in line with the Index at -5.78% vs the Index at -5.67%. While the Fund outperformed in Energy, Technology and Industrials, relative weakness largely in Health Care, Financials, Consumer Discretionary, and Materials weighed on relative returns.

Air Transport Services Group (ATSG) provided the greatest contribution to the Fund, with the stock gaining 6% during the quarter. A provider of aircraft maintenance and support services and a beneficiary of the trend towards more e-commerce, ATSG had a late year move as Amazon inked a deal to lease 10 more planes from them, as Amazon continues to build out its own logistic capabilities for faster delivery to its customers.

Ligand Pharmaceuticals was the largest detractor from performance during the quarter. The company had been a large outperformer earlier in the year, and its financials benefited from a couple of larger milestone and license payments that will cause a tougher comparison for 2019. Some bears on the stock have also been critical of the company’s pipeline of opportunities going forward. We continue to believe that the company’s monoclonal antibody discovery platform (OmniAb) is not being appropriately valued in the company’s share price.

Penn National Gaming also detracted from the Fund’s performance this quarter. We believe Penn was weak during the quarter due to increased debt levels brought about by their recent purchase of Pinnacle Entertainment and possibly some concern over whether the company would be able to achieve the synergies they expect from the acquisition. We remain bullish on the fundamentals for regional casinos and Penn in particular as industry consolidation has brought about very rational marketing spend. Higher interest rates will likely help the traditional gaming customer, and sports betting should increase traffic as it gets implemented over the next few years.


(As of 12/31/18) — While the quarter was a disappointment to an otherwise solid year, we remain very excited about the companies in the Fund’s portfolio. Valuations have become more attractive and sentiment around small caps has normalized. We believe the market has priced in a recession, and while we believe economic growth will slow in 2019, we do not believe we are headed for recession, unless the trade war and government shutdown last for an extended period of time or the U.S. Federal Reserve (Fed) gets too aggressive on interest rate hikes. We believe the Administration is sensitive to market movements and the risk declining markets can have on the overall economy, and would therefore prefer to make a deal with China. We also believe the Fed has suffered from poor communication about the likely path of future interest rate increases, but Chairman Powell is quickly learning from his mistakes. We have used this period of market weakness to take advantage of more attractive valuations in some existing positions and have started some new positions in stocks we missed at lower levels. We appreciate your continued confidence in us and look forward to hopefully better market conditions in 2019.

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.

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 Small Cap Fund received 3 stars among 585 for the three-year, 2 stars among 516 for the five-year, and 1 stars among 389 Small Growth funds for the ten-year period ending 1/31/19.

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.

Diversification does not assure a profit, nor does it protect against a loss in a declining market.

Active investing has higher management fees because of the manager’s increased level of involvement while passive investing has lower management and operating fees. Investing in both actively and passively managed mutual funds involves risk and principal loss is possible. Both actively and passively managed mutual funds generally have daily liquidity. There are no guarantees regarding the performance of actively and passively managed mutual funds. Actively managed mutual funds may have higher portfolio turnover than passively managed funds. Excessive turnover can limit returns and can incur capital gains.