Paulson & Co.’s flagship hedge fund, the $33-billion Advantage Plus which contains about $33 billion gained 14 percent in 2010 through December 10, according to Hedge Fund Research Inc. (HRI) in Chicago.

Also, the firm’s Credit Opportunities Fund rose 4 percent, and its Gold Fund soared by 35 percent.

HRI reported that during the summer the fund, which generally bets against the mortgage markets and on takeovers and bankruptcies, was down 11 percent through the end of August 2010.

According to sources, the fund made a large bet on Citigroup (NYSE: C) in late December 2009 -- when the bank’s shares were trading in the $3 to $3.30 range -- which paid off by returning about $1 billion.

A Paulson spokesman declined to comment, citing the firm’s policy of not revealing individual holdings.

"We believe the U.S. economy is recovering, and we anticipate continued growth," said John Paulson, the billionaire CEO of the fund in a letter to the firm’s shareholders.