Satya Pradhuman

CEO/Dir. of Research - Cirrus Research, LLC; Author Small-Cap Dynamics; Fascinated by Market (In)Efficiency and Smaller Firm Effect

[Satya Pradhuman @SatyaPradhuman]

The perf. edge of US Smaller Stocks over BTC throws a monkey wrench in the driver of Small Cap Perf. is purely speculative. The Small Tech sector has doubled in the past 12-mos while BTC is down 3.2%!  The global broadening & diffused AI spend account for the Small Cap revival.

[Cirrus Research @CirrusRes]

Bitcoin (BTC), down roughly 3.2% in the past year counters the general assumption that if smaller stocks are working, speculation is rampant. Int’l Markets, EM and US Small Caps, massively discounted, have led the US Large Cap market.

[Satya Pradhuman @SatyaPradhuman]

Downstream AI benficiaries imply a market broadening. How many $s does it take to inflate a ~$5 Tril. behemoth by 10%? #smallcapstocks

[Cirrus Research @CirrusRes]

Broader markets also driving US Small Cap Tech to outperform in the AI footrace. Diffused AI spending forcing a trend that started at the market bottom in 2025!

[Satya Pradhuman @SatyaPradhuman]

The duration of the war is working against market stabilization.  Rising Oil prices will likely force a defensive, valuation-sensitive bias without an offramp.  Small Cap Industrial multiples, at record highs, will likely come under increasing pressure. #smallcapstocks

[Cirrus Research @CirrusRes]

Rotational Market to Spin on Iran's Axis. As the Iran War inflates commodities and depresses risk assets, a de-escalation reverts to the fracturing of trade partners, central bankers fading US $ reserves, a bid for Gold & discounted risk assets (Int'l stocks, Small Caps & EM).

[Satya Pradhuman @SatyaPradhuman]

I just wrote my first note on Substack
https://t.co/bTztwMaIoC

[Satya Pradhuman @SatyaPradhuman]

The conditions for a broader market are ripe.  The US lagging most markets, as well as Micro Caps leading US Large Caps in 2025 underscores the change underway. The J-Effect seen this year is but a symptom of a global broadening likely to continue well into 2026. #smallcapstocks

[Cirrus Research @CirrusRes]

The January Effect is back, R2 leads SP5 by about 570 bps as of mid-January! If the literature of Jan Effect occurring in the first few days of the month holds, 2026 can officially be stamped as a Jan Effect year. If valuations matter, markets will broaden, favoring smaller caps!

[Satya Pradhuman @SatyaPradhuman]

Trending models breaking down reflects the US rotational churn. Investors continue to broaden their search driving Int'l markets and US Small Caps to outperform S&P 500. One $ out of Large Caps yields a $10 impact to Small & Micro Caps! #smallcapstocks

[Cirrus Research @CirrusRes]

The Price Momentum factor sharply lagged for 2025, first time in three years! It's ironic that sell side analysts typically get “beat up" on their forecasts, and yet our Business Momentum pillar performance, primarily Consensus Est. Revision, was dominant for the year (+32%).

[Satya Pradhuman @SatyaPradhuman]

The runup of most other markets, as well as commodities, hint at investors' attempt to hedge their Beta risk surfacing in Mega Cap/AI. #smallcapstocks

[Cirrus Research @CirrusRes]

High Beta extremes seen in Mega Cap/AI! Broadening markets reflect investors’ urge to lower their market risks by adding exposure to most markets overseas and down cap; South Korea (+96%), Germany (+28%), Emerging Mkts (+42%) and US Micro Caps (+54%) since the April bottom.

[Satya Pradhuman @SatyaPradhuman]

@LizAnnSonders Markets are broadening. MicroCaps are up ~55% since the April market bottom. Watch the term structure! @CirrusRes #smallcapstocks

[Satya Pradhuman @SatyaPradhuman]

The market broadening reflects a more cautious investment management/Asset Alloc posture. The perf gap reflects a search to diversify across regions, by size, Gold and AI (Downstream) from a severely concentrated US Mega Cap position. #smallcapstocks

[Cirrus Research @CirrusRes]

Markets are broadening! Small Caps, Micro Caps rebound sharply, tracing paths seen in overseas markets as well as Gold. The spike in Mega Cap speculation, multi-decade discounting among the smaller firms & the need for the Fed to prop up mega caps underscore a rotational market.

[Satya Pradhuman @SatyaPradhuman]

Extreme crowding in US equity markets punishes active manager results. The AI trade makes this especially painful for active Large Cap Growth. With a Fed rate cut in view, hopes of crowding relief fades further out of view. #smallcapstocks

[Cirrus Research @CirrusRes]

The extreme equity market crowding in the US runs its course punishing the performance results of active Large Cap Growth blends.  They have given up over 1000 BPS in a few short months.

[Satya Pradhuman @SatyaPradhuman]

@CirrusRes Twin threats force a quality / Value bias & fuels a break in leadership. Tariffs rule the headlines as investors remain rightfully concerned re the 4Qs of deceleration in sales at NVDA’s.

[Satya Pradhuman @SatyaPradhuman]

Credit spreads globally have converged to secular lows in the past year. Not only does this drive a better earnings backdrop, but also challenges the Fed’s easing trajectory in '25. #smallcapstocks

[Cirrus Research @CirrusRes]

Watch the bond market! The Fed will likely break its promise in 2025. 1) Credit spreads hitting 30-year lows 2) rebounding profits 3) record low unemployment 4) a possible deficit spending administration 5) regulatory backdrop about to get easier.

[Satya Pradhuman @SatyaPradhuman]

An overweight of equities in our Asset Allocation model underscores a favorable risk asset backdrop as credit remains easy and earnings continue to rebound. #smallcapstocks

[Cirrus Research @CirrusRes]

Strong fundamentals & easy credit has allowed the Cirrus Asset Allocation model to retain overweight in equities, as seen over the past couple years.

[Satya Pradhuman @SatyaPradhuman]

Downstream AI spending becomes a factor in the broadening of market leadership. More evidence of Technology broadening as smaller Semis jump double digits; Micro Cap Semis were up a whopping ~30% in Nov. #smallcapstocks

[Cirrus Research @CirrusRes]

Notable gains seen in Smaller Technology firms. Small & Micro Cap Tech leads Large; driven by Micro and Small cap Semis. gaining over 30% and 15% respectively in November!

[Satya Pradhuman @SatyaPradhuman]

As NVDA sales growth continues to decelerate, spending on downstream beneficiaries are in full swing as firms invest to roll out AI applications. #smallcapstocks

[Cirrus Research @CirrusRes]

As NVIDIA’s topline growth continues to slow, downstream beneficiaries are surfacing as Data Centers, Smaller Semis and Alternate Energy groups.

[Satya Pradhuman @SatyaPradhuman]

The promise of regulatory aircover has supercharged Bitcoin. The rotation to higher risk strategies line up with easy credit seen over the past year. Buckle-up as this risk-on market runs harder until policies from the admin become more formative in early 2025. #smallcapstocks

[Cirrus Research @CirrusRes]

A Risk-On market surfacing as Bitcoin scales new heights and Clean Energy Components Fade.

[Satya Pradhuman @SatyaPradhuman]

Investors appear to be patiently awaiting tariff policy changes; ignoring the chatter, for now. We have seen only marginal swings in the perf. of firms severely exposed to key markets/countries since the election. #smallcapstocks

[Cirrus Research @CirrusRes]

Marginal price swings seen in our Tariff Blowback baskets hint at investors’ reticence as they await firm policy guidelines from the new administration.  Firms selling into Mexico and Brazil did weaken a bit as China surprisingly appeared stable. Watch this space

[Satya Pradhuman @SatyaPradhuman]

AI investments will continue to trigger spending further down the food chain; Data Centers and Alt Energy themes such as Nuclear get the bid. Follow the money! #smallcapstocks

[Cirrus Research @CirrusRes]

A second order AI spending effect is taking the form of opportunities in Data Centers and Alternate Energy sources. The Cirrus proxies for Data Centers and Nuclear Efforts reflect a surge in gains.  Stay tuned for a closer look at the underlying fundamentals.

[Satya Pradhuman @SatyaPradhuman]

Q3 gains across regions confirm the bullish convergence in credit markets. The gains underscores a market broadening, a more valuation sensitive and lower capitalization bias. #smallcapstocks

[Cirrus Research @CirrusRes]

Convergence! Credit markets are converging to current bullish US comparisons! This is especially dramatic as the US enjoys near 30-year lows in credit for lower quality firms. Think broad market leadership not only in the US, but also adding to ones’ non-US holdings.

[Satya Pradhuman @SatyaPradhuman]

Almost 70% of all earnings forecasts in the Financial sector are being revised higher! The Financial sector sell-side analysts become more committed to the easy credit backdrop underway. #smallcapstocks

[Cirrus Research @CirrusRes]

The acceleration seen among Financial sector firms sell side forecasts further confirms a credit expansion cycle underway. Loan growth appears to be bottoming.