dynamic material instances don't work in 4.12?

I want a character actor to flicker red when I deal damage to them but the material isn’t updating. My character would smack-smack away at the enemy character but nothing would change except for if I hit the thing from juuuust the right angle and only on one of them. I couldn’t reproduce that again. I set up a print string as a debug and I am successfully applying damage every single time I strike the enemy, but the material isn’t updating. Is this a known bug? I’m not finding anything about it on google.

https://dl.dropboxusercontent.com/u/22554025/misc/mat%20not%20working.jpg

I tried testing it with my character mesh and it works fine. I tried replacing the in-engine cylinder with a cube I imported and it works fine. Something about that cylinder prevents the material from updating.