Warren Buffett "Using Berkshire stock, worst mistake"...$1 billion donation turnaround in Maine

▲ Berkshire Hathaway/AI generated image

Former Berkshire Hathaway (BRK.A, BRK.B) CEO Warren Buffett's worst acquisition cost the company $19.3 billion. However, it became a $1 billion donation legacy for the state of Maine.

According to Barron's on August 2 (local time), Buffett acquired shoe manufacturer Dexter Shoe in 1993 for $433 million. He paid 25,203 shares of Berkshire Hathaway Class A stock as the acquisition price. Subsequently, as low-cost imported shoes flooded the U.S. market, Dexter Shoe's business foundation collapsed. Buffett described the acquisition as “the worst deal I ever made” and stated that it “deserves a spot in the Guinness Book of World Records as a financial disaster.”

In a 2007 letter to shareholders, Buffett also stated, “I compounded the mistake by using Berkshire stock.” He explained that, at the time, it amounted to giving away a 1.6% stake in a company worth $220 billion for $3.5 billion. The value of the shares paid for the acquisition has since grown to approximately $19.3 billion.

The shares received by Dexter Shoe founder Harold Alfond became the donation source for the Harold Alfond Foundation. The foundation donated $104.5 million last year, allocating 99% of the grants to Maine institutions and businesses. The foundation's assets total $1.69 billion, and confirmed future grants amount to approximately $570 million. Cumulative donations to Maine have reached approximately $1 billion.

The foundation supported MaineGeneral Health with $55.25 million and invested over $100 million in establishing the Roux Institute at Northeastern University. It donated $320 million to the University of Maine System for engineering and computer education and athletic facility improvements. It also provided approximately $100 million to Maine's seven community colleges, helping them operate AI-focused vocational training with over 2,000 local employers.

The foundation also runs the Harold Alfond College Challenge, which provides $500 in college tuition funds to every child born in Maine. Last year, a total of $5,844,500 was paid to 11,689 newborns. By the end of 2025, grants allocated to 175,952 children will amount to $87 million. Including investment returns, the foundation's grants have grown to $177 million, and the total account size, including family and state government contributions, exceeds $805 million. In a letter to the foundation in 2023, Buffett stated, “I made a bad deal for Berkshire, but a lot of good came from that deal.”

[Key Summary of the Article]

-In 1993, Buffett acquired Dexter Shoe for $433 million, paying with Berkshire Hathaway shares now worth approximately $19.3 billion.

-The family of Dexter Shoe's founder used those shares to donate approximately $1 billion to healthcare, education, and the local economy in Maine.

-The acquisition, which Buffett described as his worst deal, transformed into an asset supporting hospitals, universities, vocational training, and children's college funds in Maine.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*