BOSTON (TheStreet) -- Bruce Berkowitz and the $19.7 billion Fairholme Fund (FAIRX) - Get The Fairholme Fund Report may get all the glory, but mutual fund investors would have had comparable gains last year with the little-known Buffalo Growth Fund (BUFGX) - Get Buffalo Growth Investor Report.

The Fairholme Fund returned 25.5% in 2010 as Berkowitz made bets on companies including

American International Group

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,

Sears Holdings

(SHLD)

and

Goldman Sachs

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. During the same period, the $171 million Buffalo Growth Fund, managed from Mission, Kan., rose 23.3%, with investments in

eBay

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,

Schlumberger

(SLB) - Get Schlumberger NV Report

and

JPMorgan Chase

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.

Managers at the large-cap Buffalo Growth Fund, who include Dave Carlsen, seek out well-managed U.S.-based companies expanding abroad and benefiting from emerging markets. In their view, a select group of U.S. companies will profit from developing countries getting wealthier, such as China, India and Brazil.

"We buy U.S. companies only, but only companies benefitting from global market expansion," says Carlsen. "Right now, China, India and Brazil are growing three times the rate of developing country growth. We are investing in those companies that are taking advantage of that."

The Buffalo Growth Fund puts nearly 95% of its money in U.S. equities, while Berkowitz has 64% of the Fairholme Fund's assets in stocks. Along with Kent Gasaway and Clay Brethour, Carlsen pins the fund's outperformance on stock selection and sector bets. As of Dec. 31, the fund's portfolio is weighted most in information technology (24.8%), followed by health care (17.9%), financials (13.5%) and consumer discretionary (13.4%), all well above category averages. As a value investor, Berkowitz has a heavy focus on financial services, which comprises almost 74% of his fund.

The Buffalo Growth Fund has found success by investing in growth stocks as global economic growth accelerates. The Russell 1000 Growth Index, the fund's benchmark, climbed 16.7% last year, outpacing the broader

S&P 500's

11.6% advance.

In fact, the Buffalo Growth Fund has outperformed the Russell 1000 Growth Index and the S&P 500 over the past three, five and 10 years as well as 90% of large-growth mutual funds, according to Morningstar. Since its inception in May 1995, the fund has returned 9.3%, coming in well ahead of both the Russell 1000 Growth Index and the S&P 500.

To aid in the stock-selection process, Carlsen says the fund is disciplined around valuation and price-to-growth ratios. The first step is a top-down screen, which establishes the growth universe. Carlsen says the fund identifies growth marketplaces and then picks out premier companies that are high quality with a stable balance sheet, strong cash flow and sustainable competitive advantage.

Stock selection and sector bets have also worked against the fund. The Buffalo Growth Fund is slightly overweight in health care, which held back performance last year as some of the shares, including

Baxter International

(BAX) - Get Baxter International Inc. Report

and

Abbott Laboratories

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, lagged behind.

Looking ahead over the next 11 months, the Buffalo Growth Fund managers say the economy should continue to recover, helping job growth. In addition, the credit cycle should improve and both business and consumer confidence should pick up. "That should lead to a self-sustaining recovery, which is healthier than a stimulus-induced recovery," Carlsen says.

In other words, Carlsen says, the tide is still rising economically and that provides a favorable backdrop for equities. Both Brethour and Carlsen offer up some under-the-radar stock selections that performed well in the last year and remain holdings in the fund, included on the following pages.

Chart Industries

(GTLS) - Get Chart Industries, Inc. Report

2010 Share Price Gain

: 94%

Company Profile

: Chart Industries is a global manufacturer of highly engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases.

Buffalo Growth Fund's Take

: Portfolio manager Clay Brethour says he discovered the potential in this stock before the rest of Wall Street did, as Chart Industries more than doubled over the last six months of 2010.

Brethour says that about five or 10 years ago, natural gas used to be a stranded energy source, meaning that any natural gas discovered in the Middle East couldn't be monetized, so it would be flared off. Now, technology and energy demand has reached a point where liquefying natural gas for transportation has made economic sense.

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"Chart Industries is one of the market leaders of innovating and manufacturing equipment to turn natural gas to liquid. It can be transported in LNG ships and re-gasify it at the destination," Brethour says. "It fits our globalization trend as a significant portion of China's manufacturing is on a coastal region. It makes sense for China to increase the use of natural gas as a power source versus coal, which tends to be more of a pollutant."

The Chinese government has indicated that it would like to double the country's use of natural gas over the next five years, Brethour says, which has fueled the run-up at the end of the last year.

With the stock moving as rapidly as it has, Chart Industries has moved closer to the top side of the Buffalo Funds' valuation range. The fund, though, has a low turnover rate of 30%, and the managers still think there's upside potential, even though they have trimmed the position.

Analyst Ratings

: Eight analysts covering Chart Industries have a "buy" rating while one firm recommends investors sell shares, according to Bloomberg. The average price target is $45.12, which represents 18% potential upside.

TheStreet Ratings has a "hold" rating on Chart Industries, adding that there is "little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks."

Corporate Executive Board Co.

( EXBD)

2010 Share Price Gain

: 64%

Company Profile

: Corporate Executive Board Co. is a business-services company that provides senior executives at large corporations with actionable insights, analytic tools and advisory support.

Buffalo Growth Fund's Take

: By targeting upper-level management and charging for a membership, Carlsen says Corporate Executive Board has a business model that most senior executives are familiar with.

"It's almost like a country club," Carlsen says. "You have to buy into the Corporate Executive Board. They basically take the best practices of their members -- of the community -- and share them with other members."

Buying the stock was a way for the Buffalo Growth Fund to play on confidence around business spending. But at a higher level, Carlsen says Corporate Executive Board functions as a strategist or business consultant. "It helps compartmentalize some of the key decisions that businesses have to make, in terms of problems or ways to make things more productive," he adds.

Like most stocks, Corporate Executive Board was slammed during the recent recession as it's a business-discretionary spend. After trading near $110 in 2006, the stock fell to the low-teens in February 2009 as business spending was ratcheted back. The Buffalo Growth Fund purchased shares around $16, and Carlsen says the stock could climb back to the mid-$50s.

"There is plenty of upside," Carlsen says, although he adds that Corporate Executive Board "will never see the multiple it achieved, so I don't think it will reach the $110 peak. But there is a lot of upside if they can continue to grow and gain subscribers."

Analyst Ratings

: Of the eight analysts following Corporate Executive Board, two have "buy" ratings on the stock while the other six have "hold" ratings, according to Bloomberg. The average price target of $34.75 is actually 12% below the current share price.

TheStreet Ratings maintains a "hold" rating on Corporate Executive Board, noting that revenue growth, stock price performance and a solid financial position with reasonable debt levels is countered by "weaknesses including unimpressive growth in net income and weak operating cash flow."

NetApp

(NTAP) - Get NetApp, Inc. (NTAP) Report

2010 Share Price Gain

: 61%

Company Profile

: NetApp, short for Network Appliance, is a supplier of enterprise storage and data management software, and hardware products and services.

Buffalo Growth Fund's Take

: NetApp's data storage increases companies' efficiency. Carlsen says data storage is a good place to be in general, though the real play on NetApp is what he calls "a multi-year architectural transformation within technology with cloud computing."

"NetApp is very nicely positioned for multiple trends in tech, including cloud computing and data centers," Carlsen says. "NetApp gains value because they have to manage all of those virtual machines as well as the physical machines. NetApp has the software that is best geared toward managing that in terms of performance and complexity."

Carlsen acknowledges that the stock has appreciated quickly. The Buffalo Growth Fund purchased the stock, which currently trades at $57, around $16. "We've trimmed it significantly and we're holding a smaller position. But the growth potential is still superior in the space," Carlsen says.

Analyst Ratings

: NetApp garners 20 "buy" ratings and 18 "hold" ratings from analysts, according to Bloomberg. No research firm recommends selling shares. However, the average price target of $60.35 represents only 5% upside potential from current levels.

TheStreet Ratings has a "buy" rating and $72.62 price target on NetApp, as strengths outweigh weaknesses in the stock. "The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity."

-- Written by Robert Holmes in Boston

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