Numbers don't tell you anything by themselves. You could have someone up 200% per month because he's betting his entire fund on selling deep OTM options all the time. He may continue and then lose it all in one day. Whereas a guy bleeding 2% per month might be doing the opposite strategy and have a long-run expectation way ahead of everyone else.
Even someone with a decade long track record of 25-40% a year could be a terrible person to invest with - look at LTCM or Victor Niederhoffer.
My personal criteria for considering investing would be as follows:
i) The manager must have at least 75% of their net worth in the fund. This shows that they are confident enough in their method to back it with cash. If someone is seriously wealthy ($50 mill+) then I might relax that to 50% of net worth in the fund.
ii) At least 5% of the funds assets is the manager's money. This is to show that the person is not playing with an amount of money *way* in excess of what they are used to. If someone is good enough to manage $100 million, they should have made at least $5 million out of the markets, and kept it. This will exclude some promising new guys, but I'd prefer to let them have a good year or two then come back when they've made some dough. New guys should start small until they are proven.
iii) Do you trust the person? Would they treat you fairly when the chips are down, even if that meant endangering their own position? If you would invest with them purely on a gentleman's handshake, then that's a good sign. If you find yourself wanting everything legally guaranteed in triplicate, then walk away.
iv) Is the person a blowup risk? You want to see the manager show serious respect for the market's ability to wallop them. Someone who is too confident, who goes on about how "easy" it is, or how their models/system/experience has it all figured out, will most likely blow up sooner or later. A great example is Victor Niederhoffer - you could literally tell he was going to blow up just by reading "Education of a Speculator". This is especially important if they have a very good performance record over the last few years.
v) They must show a deep understanding of the markets, based on actual trading experience of at least 5 years, preferably more. If someone understands the markets, then even if they are currently in a slow streak, they will eventually figure a way to outperform. Whereas someone who has simply found one method that works right now, but has no deep understanding, will be in trouble once their method stops working.
vi) Are they a "monkey on a typewriter"? If someone is raising money, saying they "bet on the markets always reverting back to the mean", then you know they have no edge at all and have just been lucky so far. Same with the astrologer who has made 100% per year for the last 3 years, or the short-seller who raked it in from 2000-2002 but almost went bust in the late 90s.
