The big declines in the market have brought a lot of former high-flying stocks back to earth. Few categories have been as hard hit as agricultural and fertilizer stocks.

While fertilizer stocks, like stocks in many sectors, are being caught up in the "sell everything" mentality of investors right now, some of the fertilizer sector's decline has stemmed from legitimate concerns over prices, the economy, and the credit crisis. So far, the prices for potash, a key fertilizer, have remained stable, though pricing drops are feared as the global economy slows. Industry leader Potash (NYSE: POT - News) recently announced it would cut production by -20% in 2009 in a move intended, at least in part, to stem downward pressure on the price of its fertilizer.

Long term, however, secular trends point to continued agricultural demand growth. People still need to eat, the world's population continues to grow, and the amount of arable land is limited. Thus, the only way to boost food production is to increase yields, and that requires fertilizer.

At the end of Q3, hedge fund Dawson Herman Capital Management had substantial exposure to the sector, though it was trimming its stakes during the quarter. Four of the hedge fund's top-five, U.S-listed equity holdings at the end of Q3 were fertilizer producers: Potash, the biggest company in the sector; potash and diammonium phosphate producer Mosaic (NYSE: MOS - News); Terra Industries (NYSE: TRA - News), a firm that produces nitrogen and methanol products for agricultural and industrial markets; and CF Industries (NYSE: CF - News), which operates in two segments, nitrogen fertilizers and phosphate fertilizers.

Dawson also held shares of companies in other sectors, including stakes in oil services firm Willbros Group (NYSE: WG - News) and agriculture giant Monsanto (NYSE: MON - News). A list of the other companies Dawson is investing in is available at tickerspy.com.

Potash proved to be the most popular fertilizer company among Pro investors in Q3. Among the 82 investment firms holding stakes in the company, the largest was a 14.2 million-share stake held by mutual fund giant Janus Capital Management. Meanwhile, Potash is also the favorite fertilizer stock among tickerspy members, though Agrium (NYSE: AGU - News) and Terra Nitrogen (NYSE: TNH - News), a volatile master limited partnership (MLP) with a focus on nitrogen fertilizer products, are popular as well, as is 2008 IPO Intrepid Potash (NYSE: IPI - News).