there's also an arbitrage trade going on...the funds are hedging their bet by buying MO while liquidating PM. In a weak market it's virtually a no-lose situation for the fund enabling them to maintain adequate liquidity while they're giving investors their money back. Great for the fund but very bad for the shareholder on the wrong side of their trade.
technically you are correct - it is not a true hedge. But I do suspect the stock is being systematically sold to meet ongoing redemption's. However, the point I am making is I believe the funds are also buying MO on a stock-for-stock basis to maintain a position for high yield in the tobacco space.