Inception Date
  April 14, 1998

Total Fund Assets
  $563.36 Million  (9/30/17)

Expense Ratio

Benchmark Index
  Russell 2000 Growth


Overall Morningstar™ rating out of 604 Small Growth funds as of 11/30/17 (derived from a weighted average of the fund’s three-, five-, and ten-year risk adjusted return measure).


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.

Risk vs Category


Low High

The Morningstar™ Risk vs Category rating is an assessment of the variations in a fund’s monthly returns, with an emphasis on downside variations, in comparison to the 604 funds in the Small Growth category, as of 11/30/17.


Discovery Fund Webcast – September 2017

During this webcast, we covered:
• How innovative companies can lead to above average growth
• Key objectives of the Fund and their impact on current performance
• Our proprietary portfolio management process
• Fund performance YTD

Small Cap Fund Webcast – June 2017

During this webcast, we covered:
• Our proprietary portfolio management process
• Personnel changes made in 2015 and the people managing the Fund
• Key objectives over the last few years and their impact on current performance
• Fund performance YTD
• Fund outlook for the 2nd half of 2017 & beyond


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.

~ Jamie Cuellar, Portfolio Manager


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Investment Strategy

The investment objective of the Buffalo Small Cap Fund is long-term growth of capital. The Small Cap 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 Russell 2000 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 favorable attributes, including attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.

*** This presentation is only available to registered financial professionals ***

Performance (%)

As of 11/30/173 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
Buffalo Small Cap Fund8.7827.7427.259.4112.638.0710.7411.66
  Russell 2000 Growth Index10.1522.0323.6911.3215.849.2511.036.21
  Lipper Small Cap Growth Fund Index10.2824.0223.7310.4714.307.779.776.78
  Morningstar Small Growth9.6621.2222.3410.6714.458.3810.557.30
As of 9/30/173 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
Buffalo Small Cap Fund5.0222.4222.089.2911.267.1311.5811.52
  Russell 2000 Growth Index6.2216.8120.9812.1714.288.4711.786.02
  Lipper Small Cap Growth Fund Index5.8917.5218.6110.5612.596.9210.276.55
  Morningstar Small Growth5.6215.9320.4011.1513.027.5711.077.12
YearBuffalo Small Cap FundRussell 2000 Growth IndexMorningstar Small Growth Category
(As of 9/30/17)

vs Russell 2000 Growth Index
Upside Capture85.82
Downside Capture96.93
Sharpe Ratio0.64

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.

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 9/30/17)

# of Holdings76
Median Market Cap$2.23 B
Weighted Average Market Cap$2.78 B
3-Yr Annualized Turnover Ratio37.85%
% of Holdings with Free Cash Flow68.42%
% of Holdings with No Net Debt48.68%
Active Share90.09%
Name of HoldingTickerSector% of Net Assets
Supernus Pharmaceuticals (C)SUPNHealth Care2.28%
Dave & Buster'sPLAYConsumer Discretionary2.18%
Bio-TechneTECHHealth Care2.13%
NevroNVROHealth Care2.04%
CatalentCTLTHealth Care1.98%
HealthEquityHQYHealth Care1.97%
Monolithic Power SystemsMPWRTechnology1.96%
View Full Holdings

As of 6/30/17. 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 6/30/17. 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 6/30/17. Market Cap percentages may not equal 100% due to rounding.


Equity markets continued their winning streak in the 3rd quarter of 2017, with the S&P 500 Index posting its 8th consecutive quarterly gain. Investors have been encouraged by the synchronized upswing in global economic growth. For the first time since 2007, all 45 countries tracked by the Organization for Economic Cooperation and Development (OECD) are on pace to grow this year, with the growth rates expected to accelerate in 33 of those countries. This economic backdrop, in conjunction with strong corporate earnings and a renewed focus on tax reform, helped the reflation trade regain momentum in the quarter.

The reflation trade, also known as the “Trump trade”, pushed shares of banks, industrials, and smaller companies higher, while expectations of another interest rate increase by the Federal Reserve drove relative weakness in Treasury bonds and their stock market proxies, such as utility companies. The U.S. dollar also strengthened during the period against most major foreign currencies. Furthermore, strong demand and slowing production of oil in the U.S. drove West Texas Intermediate crude prices up 12.2% in the period.

The Russell 3000 Index, a broad market performance benchmark, produced a total return of 4.57% during the quarter. Growth stocks outperformed value stocks, as the Russell 3000 Growth Index advanced 5.93% compared to a gain of 3.27% for the Russell 3000 Value Index. Shares of smaller-capitalized companies generally outperformed larger companies during the quarter. The Russell Microcap Index and the smaller-cap Russell 2000 Index climbed 6.65% and 5.67% respectively during the period, while the Russell Midcap Index advanced by 3.47%, and the larger-cap Russell 1000 Index increased by 4.48%. Technology and energy were the best performing sectors, while consumer staples and consumer discretionary sectors lagged.


The Buffalo Small Cap Fund gained 5.02% during the quarter, underperforming its benchmark, the Russell 2000 Growth Index, which gained 6.22%. The Index enjoyed good breadth of returns across industries but was largely driven by gains in technology, healthcare, and industrials. While the Fund outperformed in technology and telecom services, it failed to keep up with the strong returns posted in industrials and financials. In spite of the relative underperformance during the most recent quarter, the Fund maintained a lead over its benchmark on a year-to-date basis.

Exact Sciences was the largest contributor for the Fund gaining 33.05% during the quarter. The company continued to see solid success with their colorectal cancer screening product, Cologuard. This product is now widely covered by most commercial insurers as an appropriate screening product, and the company continues to add more prescribing doctors and new patients boosting the company’s revenues.

Dave and Buster’s was the Fund’s largest detractor during the period. The restaurant and amusement chain had been outperforming most of its peers in what has been a difficult consumer environment. However, the stock weakened this quarter as investors became concerned about moderating same store sales growth and tougher year-over-year comparisons.

CyberArk was also an underperformer for the quarter. A market leader in Privileged Account Management security software, CyberArk experienced software license growth that was weaker than expected, mainly in Europe. New government-mandated cybersecurity initiatives in Europe may be slowing their revenue growth in the near term as companies evaluate their best options to achieve compliance.


We believe the outlook for smaller-capitalization companies in the U.S. remains constructive. If the current administration is able to achieve tax reform and lower the corporate tax rate, smaller companies, whose revenues are more concentrated in the U.S., would be outsized beneficiaries. The market has started to bid small cap companies up in anticipation of this. While valuations have increased for small cap stocks, earnings growth has been solid, and the favorable interest rate environment continues to favor investment in risk assets.

The bigger risks to small cap companies continue to be a policy misstep by central banks, failure to achieve lower tax rates, and relatively high valuations. We remain focused on trimming or selling those positions with limited upside while finding new ideas that can potentially benefit from long-term trends and trade at attractive valuations by our analysis.

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. 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.

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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 2 stars among 604 for the three-year, 2 stars among 539 for the five-year, and 3 stars among 404 Small Growth funds for the ten-year period ending 11/30/17.

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.

©2017 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.