In economic relief talks, White House and Democrats continue trading proposals, insults

“It’s a good offer but it’s one Nancy Pelosi is not interested in,” McEnany said.

“Nancy Pelosi is not being serious. If she becomes serious then we can have a discussion,” McEnany said.

For her part, Pelosi (D-Calif.) criticized the GOP’s proposals as too stingy, contending that the administration is focused on protecting tax breaks for the wealthy instead of help for families and children in need. House Democrats had initially sought a $3.4 trillion spending package before bring the package down to around $2.2 trillion.

“This isn’t half a loaf, this is the heel of the loaf,” Pelosi said on Bloomberg TV of the White House proposal.

Nevertheless, Pelosi and Mnuchin were set to have another conversation Thursday afternoon, a day after they met in person for 90 minutes at the Capitol on Wednesday. The Wednesday meeting was their first in-person discussion since bipartisan coronavirus relief talks collapsed in early August.

Congress is set to adjourn at the end of this week through the election, but before they do Pelosi and Mnuchin are making one last try at a deal.

They remained far apart and seemed almost to be forecasting failure.

Republicans strongly oppose the bill. Democratic leaders canceled a planned vote on it Wednesday but said they planned to move ahead Thursday.

Many House Democratic moderates have been pushing for a new deal — or at least a new vote — in order to show constituents a good-faith effort to find consensus amid worsening economic conditions. Pelosi resisted these demands for weeks.

Pelosi acknowledged Thursday that many of her members are “very eager” to vote on a new bill, but insisted she is, too, adding: “The joy of being part of a dynamic, not rubber stamp, no lockstep caucus is, is, is — wonderful, I have to say.”

The number of people claiming unemployment rose slightly, to 26.5 million, and Americans’ income dropped in August along with the expiration of emergency federal aid programs. Disney announced 28,000 layoffs earlier this week, and major airline companies have indicated tens of thousands of layoffs are possible in coming days without additional federal help. American Airlines has announced it will move forward furloughing 19,000 workers, citing inaction in Congress.

House Democrats’ new bill includes new $1,200 stimulus checks, a renewal of $600 weekly enhanced unemployment benefits, aid to airlines, small business relief, and money for election security, the postal system, vaccine development and distribution, and more.

There is overlap in what Democrats want and the $1.62 trillion offer Mnuchin made to Pelosi on Wednesday, which included $1,200 checks, $400 weekly unemployment benefits, and $75 billion for coronavirus testing and tracing, among other provisions, according to two people familiar with its contents who spoke on condition of anonymity to confirm it. There’s also $250 billion for state and local governments, but Democrats want more.

Details of the proposal were first reported by Roll Call.

Pelosi said Thursday that significant differences remain, including on state and local aid, and Democrats’ demand for a

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Central Garden & Pet Company: Trading At Fair Value (NASDAQ:CENT)

After an impressive run-up in price, shares in Central Garden & Pet Company (CENT) are taking a breather, retracing from their 52-week highs, and currently trading at $37.8 per share.

The company has benefited from the change in consumer behavior as restrictions were placed to combat the spread of COVID. We have seen that strength translate to retailers such as The Home Depot (HD), Tractor Supply (TSCO), and competitor Scotts Miracle-Gro (SMG), all showing impressive year-to-date results and pointing to an industry enjoying the tailwinds from a shift in discretionary spending towards categories such as gardening and pets, as consumers find themselves with more time spent at home.

As it relates to CENT, the company’s Q3 was its best-performing quarter in its history driven by robust consumer demand. The company ended the quarter with $495M in cash and a leverage ratio of 2.4x, within management’s targeted range.

While the company still expects strong demand in Q4, management guided for a slight earnings loss in Q4 as they increase levels of spending towards e-commerce, digital marketing, and cost control measures. As a result, management expects full-year EPS to be at or above $1.90, implying negative EPS of minus $0.08 in the upcoming quarter. However, it’s important to keep in mind that Q4 is the smallest earnings quarter for the company. For example, in Q4 of 2018 and 2019, the company did $0.03 and $0.04, respectively in diluted EPS.

From a valuation point of view, the company is trading at a forward P/E multiple of 19x, approximately in-line with its 5-year average of 22.8x. We believe CENT is trading at fair value and the stock price is already pricing in the favorable outlook for CENT’s business segments (mainly Pet products and Garden Products). We also believe revenue growth through acquisitions might be hard to come by in a hot market. M&A has been the main growth driver for CENT, having completed 50 acquisitions since 1992. However, with strong tailwinds lifting the sector, management might have trouble finding a suitable deal at a reasonable valuation.

To sustain forward earnings of 18x, organic growth needs to remain resilient, which would depend in part on how the pandemic develops in the upcoming quarters. If a vaccine takes longer than expected, then it is reasonable to assume consumers would keep spending their discretionary incomes towards categories such as pets and gardens.

That said, with CENT trading at a fair value multiple, we would rather wait for a bigger margin of safety before initiating a position to account for the unpredictability of the current market. We are neutral on the company.

Tailwinds drove CENT’s best quarterly results

CENT reported third-quarter sales of $833M, up 18% on a year-over-year basis, and beating expectations by $110M. The company also reported a GAAP EPS of $1.27, beating the consensus by $0.43.

There was strong demand for both CENT’s product segments. The company experienced organic sales of 18% in Garden, and 15% in Pets compared to the prior-year period.

Operating margins

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Madison Square Garden Sports Is Trading At Less Than 60% Of Asset Value (NYSE:MSGS)

Thesis Snapshot

With a recent decline of over 10% in the last few trading days to $148 per share, Madison Square Garden Sports Corp. (MSGS) has fallen into Buy territory and we will begin accumulating shares at this level.

MSGS is a portfolio of sports assets, including the New York Knicks (NBA) and the New York Rangers (NHL).

According to Forbes, the Knicks are the most valuable NBA team, worth $4.6 billion in enterprise value. Similarly, the Rangers are the NHL’s most prized franchise with a value of $1.65 billion. In total, the two teams are worth $6.25 billion or $260 per share.

At Monday’s close, MSGS is valued at 57% of asset value, which appears to be an exciting entry point.

MSG Sports | Homepage

Company Background and Overview

In March of 2020, The Madison Square Garden Company (MSG) announced the approval to spin-off its entertainment businesses from its portfolio of sports assets. Upon completion of the transaction in April 2020, MSG became a pure-play sports company and changed its name to Madison Square Garden Sports Corp. The newly formed entertainment company was named Madison Square Garden Entertainment Corp. (MSGE).

MSGS is home to a collection of the most valuable franchises in professional sports, including the New York Knicks (NBA) and the New York Rangers (NHL).

Other MSGS assets include two development league teams – the Westchester Knicks, which serve as the exclusive G-League affiliate of the Knicks, and the Hartford Wolf Pack, the player development team for the Rangers playing in the American Hockey League (AHL).

In addition, the Company has an established presence in the emerging world of esports through Counter Logic Gaming (CLG), a North American esports organization, and Knicks Gaming, an NBA 2K League franchise.

Finally, MSGS operates two state-of-the-art performance centers. The Madison Square Garden Training Center in Greenburgh, NY is a 16-acre facility that offers the Knicks, Rangers, and Westchester Knicks a specialized training environment, with dedicated equipment for each team, the latest sports technology to optimize performance, and first-class amenities.

The CLG Performance Center in Los Angeles, CA includes unique competition spaces tailored to the Company’s esports game franchises, as well as a studio and editing bay for video productions and outdoor areas that can be used to hold fan events.

Valuation

Given the challenging COVID impact on entertainment-based companies like MSGS, recent operating results are poor. However, in our view, the near-term headwinds do not impact the long-term value of the Knicks and Rangers.

Further, MSGS maintains plenty of liquidity to ride out the current storm. The company has $293 million in available liquidity, including $78 million in cash and $215 million in undrawn credit facilities.

MSGS provides an opportunity to own two of the most valuable trophy assets in the world. Forbes values the Knicks and Rangers at $6.25 billion or $260 per share.

As it relates to the appraisals of professional sports teams, Forbes’ estimates carry credibility. Last week, the owner of the New York Mets agreed to sell the team for $2.42

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