Rinehart already holds four per cent of the company and if she is successful in her latest purchase, she will hold 14 per cent of the group, with a possible seat on the board.
Analysts said they were surprised that Rinehart would choose to buy into Fairfax, a struggling media empire laden with debt and a poor performing share price for many years.
"I've seen comments related to the campaign last year against the mining tax, and this could well be a platform," said CMC Markets chief market strategist Michael McCarthy.
"However, Fairfax has a reputation for fierce independence and a left-leaning journalist base."
McCarthy said Rinehart, with personal wealth that recently doubled to about $20 billion, was a hard-nosed businesswoman who had done outstanding deals and he doubted this was only about seeking a platform of influence.
"Maybe she's of the view that the great struggle this stock has had in transforming itself from a traditional media business into a new world media business has turned the corner," he said.
He pointed out that 20 per cent of 450 million Fairfax shares were short, making it one of the most heavily shorted stocks in the market, meaning fund managers had bet on it to fall further.
He predicted the stock to rise above $1 in the next week andsaid many people in short positions would be hurt.
OptionsXpress market analyst Ben Le Brun said he was surprised Rinehart would take on Fairfax, given its reputation for wrongly selling assets that were performing very well, such as the profitable Trade Me website in New Zealand.
"It's probably very good that someone like Gina Rinehart is giving them the tick of approval," he said.
Fairfax publishes newspapers including The Age, The Sydney Morning Herald and The Australian Financial Review and owns radio stations.