Fairholme (FAIRX)

One of the Kiplinger 25 funds is Fairholme (FAIRX). This is a fund that I like a lot. Morningstar (where I always do further research on funds) gives it five stars and says "This mutual fund is one of the very best." If you take a look at the top five holdings you get a very good idea of what they're up to (their holdings are very concentrated). On the one hand, you have smart money bets like Berkshire Hathaway (18.42% of assets), Sears Holdings (6.04% of assets), and Leucadia National (4.54% of assets). These are largely bets on very smart people like Warren Buffett and Eddie Lampert. On the other hand you have story bets like Canadian Natural Resources (15.12% of assets) and EchoStar Communications (8.70% of assets). I don't think you need to agree with these bets to like the fund. Let's face it, Sears Holdings is a very scary holding right now - it's roughly half of what it was a year ago and it could clearly be half of what it is now (I'm not saying necessarily or even probably but clearly possibly). I like that Fairholme goes for where the opportunities are and isn't just a closet index fund.