Evaluating Managed Funds

[Ed Miller]

So I'm rolling over my Microsoft 401k, and I'm thinking about trying out some managed funds for the first time. The way I've been evaluating them so far has been to go to Morningstar and look up stocks of companies I like. I look at the "Top 5 institutional onwers" and see if one fund owns the stock in a concentration much higher than all the others. Then I check the fund and see its top five holdings and evaluate them.

Then I check out the fund's website and prospectus and look at its performance and managment philosophy. Then I look at the fee structure, turnover, etc.

So far, I've found one fund that intrigues me. Fairholme seems to have their ducks in a row. Their symbold is FAIRX.

Anyone here have experience with managed funds and thoughts on my process or pick?