In 1995, I bought Microsoft and held Meta Platforms after it went public! What else did this fund bet on?

Buffalo Growth Fund's fund managers Dave Carlsen and Josh West said they have long been confident in some tech giants and have made some new stock recommendations.

Investment Strategy

Carlsen warned that some investors may not see the rise in interest rates and financing costs brought about by banking problems, which means that credit will tighten. "The blind spot will be those companies that continue to need external capital and are losing money."

Carlsen is looking for companies that benefit from "broadly implemented long-term growth trends," such as cross-industry diversification in areas such as energy efficiency and automation, as well as long-term development based on "common sense."

Also needed are companies with growth rates that exceed GDP, have a large potential market, and have scalable business models. Then there are competitive advantages, capital returns, and strong management teams.

West said: "Most of our companies are divided into two categories, one is companies with unlimited growth opportunities, and the other is wide moat companies that truly dominate niche markets." Their holdings of Apple may benefit from four to five such trends.

Enthusiastic about holding tech giants

Buffalo's largest stock holding is Microsoft. Since the fund was established in 1995, they have held Microsoft stock, which was priced at $5 at the time.

In addition to Apple and Microsoft, the fund also owns Alphabet and Amazon. In addition, since the Facebook IPO in 2012, the fund has held Meta.

Carlsen said that after Meta's stock price rebounded from last year's decline, they recently reduced their holdings of the company's stock, but still hold a "meaningful position."

Meta's stock price is currently about 14 times the expected earnings in 2024. Carlsen said that Meta's "capital position is very good, and once advertisers have more confidence in the macro economy, it has the ability to increase revenue again, especially revenue."

Progeny, Copart

When talking about some lesser-known companies, co-manager West specifically mentioned Progyny (PGNY), a company that provides fertility choices for employees of large companies. He believes that the market penetration rate is only 3% to 4%.

The last stock they emphasized was Copart (CPRT), which operates a junk car auction business in the United States and elsewhere.

They have owned Copart since 2014, and the company is in a competitive position because no government is willing to approve more recycling yards. They like this business model, high cash flow, and signs of more international growth.