From Whitney Tilson's April 18th letter to the investors in his fund, T2 Partners LLC: Footstar Inc. (OTC: FTAR) is another stock we had followed for years and purchased in bankruptcy – and which we own the maximum 4.5%. It is a leased department shoe retailer servicing mass merchandisers, primarily Kmart. You’re probably familiar with its Thom McAnn brand. The company has been through bankruptcy at least twice as a result of very bad strategic decisions and acquisitions.
The business has historically been a joint venture structure between the Kmart and Footstar. The two partners disagreed about the future of the business, sued each other and then reached a settlement that allows Footstar to operate in Kmart stores for at least three years, paying a percentage of revenues as “rent