While I wish that I could say something insightful about the situation at Supervalu (NYSE:SVU), I can't. Frankly Speaking, Barel Karsan, and others have already done a stupendous job espousing the thesis in regards to operations and the undervaluation for the common stock.
I will say that when a company is trading for 3-4x the average yearly improvement in tangible book value (and in a time period that includes the Great Recession), it should spark your interest. SVU's paying down debt like crazy, has someone who appears to be a great executive at the helm, and while it may not be the best operator, it's improving and expanding.
Furthermore, the thing that I really like about this situation, is that SVU's used a ton of debt to generate returns. Yes, leverage when poorly used can destroy companies, people, and as we have recently seen, entire economies. However, in the case of Supervalu, the company trades at such a low multiple of its cash generation that it should have no trouble rolling over its debt, if it can't make full payments in the near term. When a doomsday debt scenario is baked into a stock price, it can often greatly magnify returns when the perceived problem is "worked out" (anybody remember the absurdity of worrying over Steak 'n Shake defaulting on its debt?).
In light of this, I thought it to be appropriate to buy some SVU LEAPS. The real beauty here is that I am getting to use the implied leverage of the call options, benefit from the leverage the business uses, have limited downside, and get (in my mind) a pretty good chance for huge returns. Certainly, there is the potential for a total loss of capital; but when representing a small amount of my portfolio, I am more than happy to take that chance.
Disclosure: I own LEAPS of SVU.