Preheat your oven to 325°F (165°C).

In a large Dutch oven over medium heat, add the diced bacon. Cook until crisp; remove with a slotted spoon, leaving the fat in the pot.

Season the beef cubes with salt and pepper. Brown the beef in the bacon fat over medium-high heat until deep brown on the outside, about 5 minutes.

Once browned, remove the beef and set aside. Add the onions and carrots to the pot and sauté until softened, about 5 minutes.

Stir in the minced garlic and cook for another minute until fragrant. Add the tomato paste and flour, cooking for one minute.

Pour in the red wine and beef broth, scraping any browned bits off the bottom of the pot.

Return the beef and bacon to the pot along with the pearl onions, thyme, and bay leaf. Bring everything to a simmer.

Cover the Dutch oven and place it in the preheated oven. Bake for 2 to 2.5 hours, or until the beef is tender and the sauce has thickened.

In a separate pan, melt the butter over medium heat. Add the mushrooms and sauté until browned. Incorporate them into the stew in the last 30 minutes of cooking.

Remove the bay leaf, taste, and adjust seasoning. Garnish with fresh parsley before serving.