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 600 Small Growth funds as of 9/30/17 (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 597 funds in the Small Growth category, as of 9/30/17.


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

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 ($144 million to $4.4 billion, as of 5/12/17).

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 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
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 6/30/17)

vs Russell 2000 Growth Index
Upside Capture83.85
Downside Capture95.83
Standard Deviation14.87
Sharpe Ratio0.32

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 6/30/17)

# of Holdings73
Median Market Cap$2.23 B
Weighted Average Market Cap$2.70 B
3-Yr Annualized Turnover Ratio35.95%
% of Holdings with Free Cash Flow71.05%
% of Holdings with No Net Debt50.00%
Active Share89.69%
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 strong start to the year during the second quarter, primarily driven by strong corporate earnings growth. The Russell 3000 Index advanced 3.02% in the second quarter. As reported during the June 30 period, earnings from S&P 500 Index companies were up 14% year-over-year in the first quarter, the strongest growth reading since 2011.

Broadly speaking, growth stocks continued their outperformance relative to value stocks, while cyclical stocks that rallied to end 2016 underperformed as investors continue to discount the likelihood of government infrastructure spending and comprehensive tax reform.

The yield on the U.S. 10-year Treasury ended the June 30 period at 2.298%, a decline from its recent high of 2.609% in March due in large part to weaker inflation readings. In contrast, the outlook for growth and interest rate expectations improved in much of the rest of the world, which has driven the trade weighted U.S. dollar down 5.6% year to date. Oil entered bear market territory, with crude prices declining 9% during the quarter in response to stronger than expected inventory levels and rising U.S. production.

As mentioned above investors continued to favor growth over value, and the Russell 3000 Growth Index climbed 4.65% during the period compared to the more modest gain of 1.29% for the Russell 3000 Value Index. By size, microcaps were the best performers with the Russell Microcap Index gaining 3.83%. Meanwhile the large cap Russell 1000 Index gained 3.06%, followed by the Russell Midcap Index at 2.70% and the Russell 2000 Index finishing with a gain of 2.46% during the period.

In general health care was the best performing sector as the chances for legislation to repeal or reform the Affordable Care Act appeared to diminish, and investors reacted by bidding up health care stocks. The technology sector was also a strong performer as the market continued to reward the strong earnings growth produced in this area. Conversely, energy was the worst performing sector driven by the decline in oil prices mentioned above.


The Buffalo Small Cap Fund advanced 5.48% in the second quarter outperforming the Russell 2000 Growth Index return of 4.39%. Healthcare drove almost half of the benchmark’s return as investors gained more confidence that the Republican-led Congress would be unable to reach consensus on how to unwind and replace the Affordable Care Act. Technology was also a significant contributor to the index’s performance and most other sectors performed fairly well during the period. One outlier was energy which declined in conjunction with oil prices due, in part, to surplus of domestic inventories as mentioned in the capital market review above.

of these companies does not meet our investment criteria. As a result, outperforming in periods when the healthcare sector surges can be challenging. However, the portfolio’s relative performance in the healthcare sector this quarter was solid. The fund benefited from our position in Akorn which received a buyout offer from Fresenius and gained 38% in the quarter. The fund also experienced solid contributions from Exact Sciences, producer of the ColoGuard colorectal cancer screening test, Supernus Pharmaceuticals, a branded drug company with epilepsy products, and Catalent, a contract manufacturer for pharmaceutical companies.

The furniture and home goods retailer At Home Group was also a significant contributor to overall results for the quarter. The company went public in August 2016 with fairly weak demand for its shares. Since the IPO, the company has continually posted solid operating results and remained one of the best growth stories in retail with a differentiated, value-based offering that has experienced increasing interest from its core customer base.

To the downside the portfolio experience a few headwinds during the period and IMAX Corporation was the largest underperformer as a weak box office and concerns over shortening windows for feature films before going to video on demand weighed on the company’s estimates and its valuation multiple. We believe the company has an exceptional, differentiated brand and that the film slate for the rest of 2017 will improve against easier comparisons which should help the stock recover.


While the portfolio has performed well in the first half of the year valuations have also increased. However we are encouraged by what we are seeing in the economy and in the outlook for risk assets. Bonds remain an uncompetitive alternative and the Fed seems unwilling to take drastic measures on interest rates as inflation remains benign. While Trump’s success in approving his political agenda including significant tax reform remains a wildcard, investors are so far satisfied with the status quo and company executives are pleased with a more favorable regulatory environment. We continue to take action on those stocks with an unfavorable upside to downside trade-offs as we are actively trimming or selling investments that approach a full valuation by our analysis, and deploying capital into opportunities that we believe offer a better risk/reward profile.

Although the growth in the domestic economy has benefited small cap stocks, international economies seem to be improving and may present new investment opportunities which we are currently evaluating. As always, we appreciate your continued confidence in the fund and remain committed to pursuing investments that will potentially benefit the portfolio for years to come.

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 600 for the three-year, 2 stars among 531 for the five-year, and 3 stars among 394 Small Growth funds for the ten-year period ending 9/30/17.

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.