Steps to repro:

1. Open Unity;
2. Open attached project and 'LODtransitionBug' scene;
3. There is and LOD Group gameobject in the scene with animate cross-fading mode turned on;
4. Scroll in and out in the Scene view to invoke LOD transition (Capsule -> Cylinder);

5. Observe that the object blinks on transition from Capsule to Cylinder (see attached gif video);
6. Select 'CrossFade LOD Object' in the Hierarchy view;
7. In the Inspector's LOD uncheck 'Animate Cross-fading' checkbox;

8. Repeat step 4;
9. Observe that blinking has disappeared.

Expected result:
LOD group should have smooth transition with using cross-fade animation mode.

Notes:
- Reproducible on both OSX 10.11.4 and Windows 10;
- Reproducible in 5.5.0a1 graphics/instancing/lodfade, 5.5.0a1, 5.4.0b23, 5.3.5p1.
- Reproducible in both Scene and Game views;
- Happens only with Cross-Fade transition mode;
- Doesn't repro with SpeedTrees.