  Spin dependent fragmentation functions for heavy flavor quarks to fragment
into heavy baryons are calculated in a quark-diquark model. The production of
intermediate spin 1/2 and 3/2 excited states is explicity included. $\Lambda_b$
, $\Lambda_c$ and $\Xi_c$ production rate and polarization at LEP energies are
calculated and, where possible, compared with experiment. A different approach,
also relying on a heavy quark-diquark model, is proposed for the small momentum
transfer inclusive production of polarized heavy flavor hyperons. The predicted
$\Lambda_c$ polarization is roughly in agreement with experiment.
