Malcolm Shaw of Hydra Capitals Top Picks for 2025

Source: Streetwise Reports 01/21/2025

Streetwise Reports sat down with Malcolm Shaw of Hydra Capital Partners to learn about his top picks as we head into 2025.

Malcolm Shaw’s journey into resource investments began with a foundation in geology, having started his career as a geoscientist at PanCanadian Petroleum, now known as Ovintiv. Transitioning into the investment world, Shaw spent over two decades honing his expertise, including roles as an international energy research analyst at Wellington West Capital Markets and Vice President at K2 & Associates Investment Management. More than a decade ago, he co-founded Hydra Capital, where he now manages his own investments with a hands-on approach.

During a recent conversation with Streetwise Reports, Shaw emphasized that he doesn’t provide stock recommendations. Instead, he shares insights on companies and sectors he finds compelling, leaving the decision-making to his readers. His focus is on value and long-term potential, and every company he features on his blog is one he personally invests in.

A Specialist’s Perspective on Lithium

Shaw’s take on lithium in 2025 reflects a market in flux but with strong long-term fundamentals. He noted, “We’ve been in a situation of short-term oversupply, but EV sales, especially in China, are setting records as a percentage of overall vehicle sales. The underlying demand for lithium remains robust.” However, he cautioned that while there’s no shortage of lithium globally, developing new, large-scale mines takes time due to permitting and construction delays.

Shaw’s confidence in the sector stems from the ongoing electrification trend, which he equated to essential commodities: “The same way you need wheat to make bread and oil to fuel the economy, you need lithium to build electric cars. Regardless of price fluctuations, the long-term demand trend is clear.”

Sigma Lithium Corp.

Shaw highlighted Sigma Lithium Corp. (SGML:TSXV; SGML:US) as a unique player in the lithium market. [OWNERSHIP_CHART-10788]

Based in Brazil, Sigma benefits from a prolific region with high grades and low costs. “Sigma is interesting because it’s the biggest independent producer with very low costs. Even in this market, they’re making money, which is rare,” he explained.

Sigma’s current production run rate was approximately 60,000 tons of 5.5% lithium oxide concentrate per quarter in 2024, with plans to double that capacity. Shaw noted that the company’s Phase Two expansion is budgeted at 500 million Brazilian reais (approximately US$100 million), underscoring its low capital intensity per ton relative to peers. Looking further ahead, Sigma’s plans for Phase Three could elevate production capacity to 520,000 tons of 5.5% lithium oxide concentrate annually, making it a prime target for acquisition.

“Sigma’s economics are peer-leading, and being a large independent makes it an attractive acquisition target,” Shaw said. “The EV theme isn’t going away, and Sigma is well-positioned to capitalize.”

According to Refinitiv, 83.64% of Sigma Lithium is owned by management and insiders. Of those, Prakash Parikh owns the most with 20.8%. Kaplana Parikh owns 20.78%, Viren Zaverchand owns 15.81%, as does Pujan Zavercahnd. Binaben Shah holds 4.12%. Sigma Lithium’s market cap stands at approximately CA$1.36 Billion.

Tenaz Energy Corp.

Following a remarkable 900% surge from its December 2022 lows, Tenaz Energy Corp. (TNZ:TSX) has emerged as the top-performing energy stock on the TSX and the sixth-best performer across all sectors. [OWNERSHIP_CHART-10646]

The company’s recent US$140 million unsecured note offering has fortified its balance sheet, positioning it to capitalize on future acquisition opportunities.

With the NAM/NOBV North Sea acquisition expected to close by mid-2025 and European gas prices hovering around CA$22/mcf, TNZ provides a rare opportunity to access high-value European energy markets. The company’s tightly controlled capital structure, with only 27.4 million shares outstanding, amplifies its ability to drive shareholder value through accretive deals.

At this stage, Shaw’s perspective on TNZ underscores a strategy of disciplined patience. “As the team continues to focus on creating per-share value through its acquire-optimize-develop strategy, my role is simply to wait and let the results speak for themselves,” he explained.

“Tenaz is one of the best ways to play European gas prices,” Shaw said, citing the premium pricing in the Dutch market. He added, “Their management team’s track record of operational success and disciplined capital allocation makes them a standout.”

Overall, Shaw’s outlook on oil and gas remains optimistic despite global shifts toward renewable energy. “Oil demand continues to grow at about 1% per year. Emerging markets like India and Indonesia are driving this growth,” he explained. He also highlighted the sector’s strong free cash flow, dividend yields, and undervaluation relative to other markets.

According to Refinitiv, Tenaz Energy’s market cap is CA$258.92 million, with management holding 11.32% of the company’s shares. Institutions & Strategic Investors owns 2.76%, and the remainder is held by retail investors.

TAG Oil Ltd.

TAG Oil Ltd. (TAO:TSX.V; TAOIF:OTCQX) has faced challenges but remains a compelling speculative play, according to Shaw. [OWNERSHIP_CHART-1151]

The company’s focus on developing the Abu Roash F reservoir in Egypt could yield significant results if the upcoming pilot program proves successful.

“TAG’s management team, led by Abdel Badwi, has a history of unlocking value in underappreciated assets,” Shaw said. “If they can execute their plan, which includes closing a recently announced acquisition and showing that they can effectively drill the Abu Roash F play, this could get TAG heading in the right direction.”

As per Refinitiv, TAG Oil’s market cap is CA$26.71 million, with 25.13% of shares held by insiders and 2.09% by institutions. The remaining is held by retail investors.

Condor Energies Inc.

Condor Energies Inc. (CDR:TSX.V) is gaining traction with its operations in Uzbekistan and Kazakhstan. [OWNERSHIP_CHART-5932]

Shaw highlighted the company’s recent production ramp-up from Soviet-era fields, increasing output to over 11,000 BOE of gas per day by the end of 2024. Condor’s separate Kazakh LNG initiative also presents significant growth potential.

“Their low-cost production in Uzbekistan and plans to supply LNG to Kazakhstan’s rail fleet and industrial users create a unique value proposition,” Shaw said. He believes Condor’s market cap of CA$128 million significantly undervalues its long-term potential.

 Refinitiv reports that Condor has management and insiders holding 3.51%, Corporations at 21.42%, and Institutions holding .76%. The rest is retail. The company’s market cap is CA$86.18.

A Complete Look

Malcolm Shaw’s insights provide a valuable window into the dynamics of the resource sector and the strategies that underpin successful investments.

Whether it’s identifying opportunities in lithium with companies like Sigma or exploring the untapped potential of oil and gas plays, Shaw’s focus on long-term value and disciplined patience is a consistent theme.

For investors looking to navigate the complexities of resource investments, Shaw’s approach offers a clear reminder of the importance of strategy, execution, and staying ahead of market trends.

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Important Disclosures:

1) James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.

2) This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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( Companies Mentioned: SGML:TSXV;SGML:US, TAO:TSX.V; TAOIF:OTCQX, TNZ:TSX, )

Source: https://www.streetwisereports.com/article/2025/01/21/malcolm-shaw-of-hydra-capitals-top-picks-for-2025.html