Malcolm Shaw Likes Under-Covered, Unloved Energy Stocks

As a former analyst with a strong background in geology, Malcolm Shaw uses his technical and market experience to dig through piles of news and company data to uncover resource investment situations that often go unnoticed by mainstream analysts. In this interview with The Energy Report, Shaw discusses the disconnects he sometimes finds between a company's fundamentals and its stock price, and why uranium is his favorite unloved sector right now.

The Energy Report: As a retired sell-side analyst and hedge fund VP, what do you look for in selecting and analyzing investment situations?

Malcolm Shaw: My background is actually geology, but over time I got pulled into finance. There was an advantage to having geological or technical knowledge, particularly in evaluating small- and mid-cap companies. Technical knowledge aside, the key for me is good management, and I've met hundreds of management teams over the years. Good management with sector expertise is always my first screening tool. After that I like companies that are under covered or generally unloved by the street because they tend to be where the market is less efficient. I'm not really going to add any value talking about names like Exxon Mobil Corp. (XOM) or Encana Corp. (ECA:TSX; ECA:NYSE) simply because the information is so well distributed and the market is more efficient in larger caps, but not in smaller caps.

Next, a company should have a good balance sheet, because if it doesn't, that adds a layer of financial risk. Then you need to have an asset that can have a material impact on the company's value in the market, either through discovery or the underlying asset value. Sometimes you see junior companies with great assets become exceedingly cheap relative to the underlying project value. You see that when they get hurt on spot commodity prices or short-term news events and yet the underlying value of the asset is clear. That's where you can get some pretty big disconnects. That's another place where I like to focus: In early-stage projects, understanding the data as soon as it is available can be a real advantage too, though a speculative component always remains.

TER: As an aside, I know that you're connected with Malcolm Shaw is a retired sell-side analyst and former hedge fund vice president for K2 & Associates Inc. With a Master of Science in geology and 12 years of experience in the resource and investment industries, Shaw researches under-followed companies where digesting data can provide investors with a competitive edge the typical Wall Street analysis doesn't offer. He currently "hangs his hat" at the investment firm Hydra Capital Partners.

DISCLOSURE:
1) Zig Lambo conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

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2) The following companies mentioned in the interview are sponsors of The Energy Report: Petaquilla Minerals Ltd., Fission Energy Corp., Uranerz Energy Corp., Energy Fuels Inc. and Pan Orient Energy Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Malcolm Shaw: I or my family own shares of the following companies mentioned in this interview: Petaquilla Minerals Ltd., Alpha Minerals Inc., Cameco Corp., Fission Energy Corp., Powertech Uranium Corp., Uranerz Energy Corp., Energy Fuels Inc., Pan Orient Energy Corp., Advantage Oil and Gas Ltd., Iona Energy Inc. and Condor Petroleum Inc. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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Written By: The Energy Report