Stir together the water, soy sauce, and thyme in a small saucepan over low heat to keep warm.
Heat the oil in a medium-size saucepan over medium-high heat. When the oil is hot add the mushrooms and shallot and cook, stirring often, until mushrooms are browned, about 4 minutes.
Stir in the sherry and rice. Cook, stirring very often, until the liquid in the pan has evaporated, about 2 minutes.
Reduce the heat to medium. Pour in 1/2-cup of the warm water mixture and cook, stirring often, until the rice has absorbed most of the liquid. Repeat this process with another 1/2-cup of the water until all the water is used (If water begins boiling to rapidly turn down the heat to medium-low). This whole process will take about 25 minutes.
When the rice is tender and has absorbed all the liquid take it off the heat and stir in the butter and Parmesan cheese until melted through.
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