Warren Buffett's greatest error - buying Dexter Shoes

Today I'll describe how Warren Buffett got into his worst investing mistake, and tomorrow I'll cover the tragedy that started to unfold almost immediately after buying.
Dexter Shoes
Harold Alfond, the son of blue-collar Russian-Jewish immigrants, worked his way up from 25c an hour shop floor work making shoes in the Depression to factory superintendent. Then, aged 25, in 1939, he picked up a hitchhiker when driving to the county fair in Maine.  In passing, the hitchhiker mentioned an idle shoe factory in nearby Norridgewock. Intrigued, Alfond skipped the fair to look over the factory.  He wanted it but didn’t have the $1,000 asking price.
However, a year later he sold his car and partnered with his father to buy it. That $1,000 was turned into $1.1m when in 1944 the Norrwock Shoe Company was sold to rival for $1.1m.
In 1956 Alfond put down a bet ten times as large as the one when he was 26 by creating another shoe company and spending $10,000 buying an abandoned wool factory in his hometown of Dexter, Maine. His right-hand man was to become his nephew Peter Lunder, who joined in 1958.
At first, The Dexter Shoe Company concentrated on making own-label shoes for department stores such as Sears, JC Penny and Montgomery Ward. But in 1962 Alfond, Lunder and the team developed the Dexter brand, signifying “reasonably priced” shoes for men and women but with some style. Dexter was aiming at the volume market. With the help of crack sales and marketing team these shoes were sold to independent stores all over the US.
The innovation of the 1980s was the purchase of malls along highways in New England. Dexter turned these into factory outlet malls selling seconds and discontinued lines.  The company would take some space for their own shoes - the units looked like log-cabins - and rent out units to other manufacturers. By 1990 Dexter owned more than 80 factory outlets, employed 4,000 employees and annually turned over $250m selling 7.5m pairs of shoes.
By then it had branched out into moccasins, boat, golf and athletic shoes.
The deal to buy Dexter
In early 1993 Buffett was excited by the way Frank Rooney and Jim Issler were managing “superbly-run” H. H. Brown (bought for Berkshire in 1991), “a real winner…expectations have been considerably exceeded” (Buffett's 1993 letter to shareholders)
Confidence was boosted further when Rooney and Issler deftly did some “fixing” at Lowell shoes (bought 1992) and again surpassed Buffett’s hopes.
So, when Rooney suggested to Buffett that Dexter would fit well in The Shoe Group and that he should meet his old friends Alfond and Lunder to discuss buying it Buffett jumped at the chance.
An airport in West Palm Beach, Florida was the chosen location.  “We went to some little restaura………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
(From the third volume of The Deals of Warren Buffett - to be published next year (I've only written 4 of the 11 chapters so far))