Fidelity National Goes After Large Piece of Giant Group : Investment: The Irvine firm starts by buying 8.5% of the company owned by producer Burt Sugarman.

Title insurer and fast-food operator Fidelity National Financial Inc., once again on the prowl for underpriced stock, said Friday it has purchased 8.4% of Hollywood producer Burt Sugarman’s investment company for nearly $3 million, and plans to buy more.

Fidelity has bought 424,589 shares of stock in Sugarman’s Beverly Hills investment company, Giant Group Ltd. The Irvine firm hopes “to acquire a significant equity position” in Giant Group, according to a document filed Friday with the Securities and Exchange Commission.

In addition, Fidelity chairman William P. Foley II personally bought 10,000 shares--a 0.2% stake--for $72,500 and will follow Fidelity’s lead, the SEC document said.

Starting July 12, Fidelity and Foley bought the stock at prices ranging from $6.375 a share to $7.625 a share.

Sugarman was not available for comment.

Fidelity, which has grown into one of the nation’s larger title insurers mainly through acquisitions, has purchased and tried to buy related companies to smooth out its cyclical earnings record. Three months ago, it called off its 18-month hostile bid to take over US Facilities Corp., a Costa Mesa group health and medical insurance firm.

Fidelity, whose other interests include the Carl’s Jr. fast-food chain, is not interested in Giant Group’s 48% ownership of troubled Rally’s Hamburgers Inc., said Andrew F. Puzder, Fidelity’s general counsel. It wants cash.

Giant Group, which lost $10.8 million in the first nine months this year mainly from large losses at Rally’s, has $28.3 million in cash and $17.5 million in securities. Last year, it sold its original business, Giant Cement Holding Inc., which made portland and masonry cements, ending up with $50 million after taxes from the proceeds.

Rally’s is a drive-through hamburger chain with nearly 500 restaurants in 25 states.

Sugarman is still fighting a lawsuit filed nearly two years ago that alleges that he and other Rally’s officials manipulated financial information to enrich insiders. Sugarman was ousted in February 1994 as Rally’s chairman and chief executive.

Sugarman paid a $600,000 fine in 1991 to settle charges he violated securities laws by concealing his plans to take over Rally’s in 1990.