Warren Buffett, George Soros, and Carl Icahn are legendary investors ranked by Forbes as among America's billionaire elite, but all three have made mistakes on their path to riches. Here are three of their biggest blunders and what we can learn from them.

No 1: Warren Buffett's love affair with textiles
Buffett's decision to stick with Berkshire Hathaway's (NYSE:BRK.B) (NYSE:BRK.A) struggling textile manufacturing business long after turning down an offer that would have made him money on his investment cost him millions of dollars over the years.

In his early years, Buffett focused more attention on the financial value of a business than on a company's management or a business' defendable moat and, as a result, he picked up shares from the bargain bin in textile giant Berkshire Hathaway in 1962.

Buffett's gamble that Berkshire Hathaway's shares would rally up to its financial value proved to be correct, leading to an offer by Berkshire's then-management to acquire Buffett's stake for $11.50 per share in 1964. However, after receiving the final offer and noticing that the price was an eighth of a dollar lower than what had previously been agreed upon, Buffett tore up the deal and doubled down on his Berkshire Hathaway bet.

That decision eventually led to his taking over Berkshire Hathaway, but even the talented Buffett couldn't overcome headwinds tied to insurmountable labor costs and a shift toward sourcing textiles overseas. Despite propping up Berkshire Hathaway's textile business over the next 20 years, he finally admitted his mistake and shuttered Berkshire Hathaway's textile operation in 1985.

Overall, Buffett's decision not to tender his shares at the lower price he was offered and instead take over Berkshire Hathaway cost him millions of dollars in sunken money and opportunity cost -- an amazingly bad decision for the Oracle of Omaha -- but it taught him two important lessons. First, always consider whether a company's business is top-notch before buying its stock simply because it's cheap. And second, if your investment thesis is wrong, admit your mistake and move on.

Source: The Guardian.

No. 2: George Soros' bad bet on a struggling retailer
Investors' hopes that a reimagined J.C. Penney (OTC:JCPN.Q) would lead it back to dominance were officially dashed when mounting losses led to the ouster of former CEO Ron Johnson in 2013.

In the wake of Johnson's departure, Soros bet that a return to the company's prior discounting model would encourage customers to return to stores and boost the retailer's shares. Unfortunately, that thinking proved incorrect and he ended up losing as much as 50% on his investment before giving up and unloading his shares in 2014.

Soros has always embraced a high-turnover investing style, but his experience with J.C. Penney is a valuable reminder that turnarounds can take longer than you expect and thus investing in them can tie up money and create losses that can keep you from profiting from other ideas.

No. 3: Carl Icahn's movie madness
In 2011, Icahn referred to his investment in former movie retailer Blockbuster as the worst decision in his 30-year investing career.

His involvement in Blockbuster began in 2005 when it was planning to buy a major competitor and worries were mounting that movie retailers would struggle to fend off rivals like Netflix (NASDAQ:NFLX).

After Blockbuster's acquisition plans fell apart, Icahn started lobbying against its spending on online distribution, executive compensation, and management's decision to do away with late fees. Eventually, Icahn won control of Blockbuster's board, ousted its CEO, and attempted to reinvigorate the retail store brand. However, those efforts were doomed given that consumers continued to flock to Netflix.

Overall, Blockbuster's former CEO claims that Icahn lost about $200 million by investing in Blockbuster, but that loss pales in comparison to the money he made by learning from his mistake. His experience with Blockbuster led to his investing $321 million in Netflix in 2012, and over the next three years, Forbes estimates that Icahn made about $2 billion on Netflix -- proving once and for all that learning from your mistakes can be very profitable.

Bringing home the point
All three of these mistakes were the result of a faulty investing thesis. Buffett was convinced that the U.S. textile business would remain the world's best; Soros thought jaded customers would return more quickly to J.C. Penney's stores than they did; and Icahn believed that movie retailers would survive the online movie assault.

In each case, paying attention to mounting evidence that their investment thesis was wrong could have stanched their losses, but that isn't the biggest lesson that investors should learn from these three blunders. Because each of these talented investors eventually admitted his mistake so they could invest in other opportunities -- and those other opportunities more than made up for the losses resulting from their gaffes -- investors might want to focus less on defending the mistakes they've made in the past and more on finding the next moneymaking idea.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.