BOSTON (TheStreet) -- Paulson & Co. founder John Paulson earned a record amount for any hedge fund manager last year with the help of gold and bank stocks. Now he's counting on laptop and printer maker Hewlett-Packard (HPQ) - Get Report and lumber and pulp company Weyerhaeuser (WY) - Get Report for a repeat performance in 2011.

John Paulson

gained notoriety for his big bets on gold and financial shares such as

Goldman Sachs

(GS) - Get Report



(C) - Get Report

, which netted him a personal profit of $5 billion in 2010, the largest one-year gain in investing history.

John Paulson (Paulson & Co.)

Paulson maintained his bet on gold in the first quarter, even as billionaire investor

George Soros

has pared investments in the precious metal. Earlier this month, Paulson told investors at a New York meeting that gold could climb as high as $4,000 an ounce, from about $1,500 today. Soros, who last year said gold was the ultimate bubble, sold much of his investments in gold and silver, according to a report in

The Wall Street Journal


In the first quarter, Paulson's position in the

SPDR Gold Trust

(GLD) - Get Report

was unchanged at 31.5 million shares, valued at more than $4.4 billion. However, the hedge fund manager dimmed his view of bank stocks, dumping 80,000 shares of Citigroup, 2 million shares of

CIT Group

(CIT) - Get Report

and 226,000 shares of

Bank of America

(BAC) - Get Report


>>View John Paulson's Portfolio

Paulson & Co. also eliminated entire positions in 14 companies, including


(PFE) - Get Report


Walter Energy




(SYMC) - Get Report

. On the other hand, Paulson increased his established stakes in companies like


(RIG) - Get Report

and gold companies such as

Barrick Gold



Gold Fields

(GFI) - Get Report


Despite the bet on gold, Paulson's flagship Advantage Fund Plus is down 1.7% this year through the end of April, according to several media reports. Paulson & Co.'s most recent filing with regulators shows that the firm's equity portfolio rose to $34.3 billion from $29.3 billion at the end of the fourth quarter. Hedge funds that manage more than $100 million are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the SEC within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines.

Now, Paulson is taking advantage of cheap debt. Filings with the U.S. Bankruptcy Court of Manhattan at the end of April showed that Paulson was part of a group that has begun acquiring billions in debt of

Lehman Brothers

, which collapsed in September 2008 during the credit crisis. Paulson purchased the debt for as little as 10 cents on the dollar.

The Wall Street Journal

estimates that Paulson could reap profits between $350 million and $726 million on the Lehman trades, depending on the settlement amount approved in bankruptcy court.

Most interesting to investors are Paulson's newly initiated positions, which could be the foundation for another year's worth of record profits. Overall, Paulson added 18 new positions to the fund's portfolio last quarter, including small stakes in




Atheros Communications



Other new holdings, though, have market values that exceed $65 million, making them among Paulson's biggest and newest bets in 2011. The following pages detail Paulson & Co.'s

10 largest new positions in the first quarter

, ranked by market value as of March 31.


Rock-Tenn Co.

(RKT) - Get Report

Company Profile

: Rock-Tenn is a maker of packaging products, recycled paperboard, containerboard, bleached paperboard and merchandising displays.

Paulson's Investment

: The hedge fund bought 1 million shares of Rock-Tenn during the first quarter, a position valued at $69 million as of March 31.

Rock-Tenn shares have soared this year, surging more than 32%. In January, Rock-Tenn said it would acquire

Smurfit-Stone Container


, another holding of Paulson's fund, for $35 a share.


J.C. Penney

(JCP) - Get Report

Company Profile

: J.C. Penney is the well-known department store operator, with more than 1,100 stores in the U.S. and Puerto Rico. JCPenney sells merchandise like family apparel and footwear, accessories, and fine and fashion jewelry.

Paulson's Investment

: Paulson & Co. initiated a new position in J.C. Penney during the first quarter, buying 2.3 million shares that had a value of almost $82 million as of March 31.

Fellow hedge fund investor Bill Ackman of Pershing Square Management is also a holder of J.C. Penney shares. The retailer's stock is up 19% this year, and on Monday the company reported first-quarter net income of $64 million, a 7% increase from the year-ago period. J.C. Penney also upped its full-year earnings guidance.


SL Green Realty

(SLG) - Get Report

Company Profile

: SL Green Realty is a New York-based real estate investment trust.

TST Recommends

Paulson's Investment

: The hedge fund bought 1.4 million shares of SL Green Realty during the first quarter, ending with a market value of $105 million as of March 31.

SL Green shares are up 25% this year. In late April, the company said first-quarter funds from operations, or FFO, surged 68% from a year ago. At the same time, SL Green announced that it had acquired the remaining interest of



headquarters in Times Square, which is valued at more than $1.2 billion.


Scripps Network Interactive


Company Profile

: Scripps Network owns television and interactive brands, including the Home and Garden Television (HGTV), Food Network, Travel Channel, DIY Network (DIY) and Cooking Channel.

Paulson's Investment

: Paulson grabbed 3 million shares of Scripps during the first quarter, a position that was valued at $150 million as of March 31.

Shares of Scripps Network are down nearly 3% this year, although the stock is up nearly 10% since the beginning of February. In April, Scripps agreed to sell


, the online shopping comparison service, to private-equity firm Symphony Technology Group for $165 million.


Family Dollar


Company Profile

: Family Dollar operates more than 6,600 general merchandise retail discount stores in 44 states.

Paulson's Investment

: Paulson & Co. purchased 3.5 million share of the discount retailer, worth $177 million as of March 31.

Shares of Family Dollar are up 4.5% this year, as the company has been a takeover target of Nelson Peltz's hedge fund Trian Group. However, the company has thus far spurned Peltz's offer. In March, Family Dollar reported better-than-expected fourth-quarter earnings and raised the low end of its full-year outlook.


Smurfit-Stone Container


Company Profile

: Smurfit-Stone Container makes paperboard and paper-based packaging in North America, including containerboard and corrugated containers.

Paulson's Investment

: The hedge fund bought more than 9 million shares of Smurfit-Stone in the quarter, which had a value of $353 million as of March 31.

Shares of Smurfit-Stone are up a staggered 54% this year. In January,


(RKT) - Get Report

said it would purchase Smurfit-Stone in a $3.5 billion cash-and-stock transaction, a mere seven months after Smurfit-Stone emerged from Chapter 11 bankruptcy protection.


Alpha Natural Resources


Company Profile

: Alpha Natural Resources is a supplier and exporter of metallurgical coal for use in the steel-making process. The company is also a major supplier of thermal coal to electric utilities and manufacturing industries.

Paulson's Investment

: Paulson bought 12 million shares of Alpha Natural during the first quarter, which was worth $712 million as of March 31.

Alpha Natural has been a loser for Paulson's fund so far, falling more than 20% this year. Shares slid earlier this month after the coal supplier's first-quarter earnings release disappointed investors.



(WY) - Get Report

Company Profile

: Weyerhaeuser is a timber-products company. It primarily grows and harvests trees, and then builds homes and manufactures other forest products.

Paulson's Investment

: Paulson & Co. purchased almost 32 million shares of Weyerhaeuser during the first quarter, a position worth about $780 million as of March 31.

Shares of Weyerhaeuser are up more than 15% this year, as the timber company announced last year it would convert into a real estate investment trust, or REIT.



(LZ) - Get Report

Company Profile

: Lubrizol is a specialty chemical company, producing additives, ingredients, resins and other compounds used in engine oils, specialty driveline lubricants, over-the-counter pharmaceutical products, performance coatings, medical products and compressor lubricants.

Paulson's Investment

: Paulson & Co. snatched up 6 million shares of Lubrizol during the first quarter, which carried a market value of $803 million as of March 31.

Lubrizol's stock is up 25% this year, thanks to a takeover bid from Warren Buffett's

Berkshire Hathaway

(BRK.B) - Get Report

. Investments in Lubrizol would eventually force David Sokol, one of Buffett's leading lieutenants at Berkshire, to resign. Since then, Buffett has been criticized for first defending Sokol's investments in Lubrizol before condemning them more than a month later during Berkshire's annual meeting of shareholders.



(HPQ) - Get Report

Company Profile

: Hewlett-Packard is one of the world's leading computer makers. The company provides technologies, software and services to consumers and businesses.

Paulson's Investment

: The hedge fund grabbed 25 million shares of HP during the first quarter, a position worth $1 billion as of March 31.

Shares of HP are down 5% this year, and has become a favorite of value investors as the stock trades at less than 7 times next year's earnings, a steep discount to the broader market. Shares fell hard late Monday after multiple reports that chief executive officer Leo Apotheker circulated a letter on May 4 saying HP is in for "another tough quarter" and stressing the necessity of "watching every penny."

>>To see these stocks in action, visit the

Paulson's 10 Best New Investment Ideas

portfolio on Stockpickr.

-- Written by Robert Holmes in Boston


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