The Craven Cottage outfit - two points adrift at the bottom of the Premier League - announced the dramatic appointment of Magath as first-team manager on Friday, bringing an end to Meulensteen's tenure after just over two months.
Collins, who spent three seasons at Fulham between 2000 and 2003, has questioned whether recent developments are in the best interests of the club.
"There are very strange goings on at Fulham and I'm not liking what I'm seeing," he told talkSPORT.
"Rene Meulensteen signed five players (during the January transfer window), got rid of three big ones, but he had no time to work with his new players.
"Questions need to be asked and answered: Why have they done that? Why did they give the manager the go-ahead to bring in new players and then give him no time to work with them?
"It seems to me Fulham have made some rash decisions. We've not really heard from the owner in the last few months and he hasn't really answered any questions. Something has happened in the background but it would be nice to know why.
"They've taken a huge, huge gamble. It's in the lap of the Gods now."
