Heading hunting during waypoint hold (with logs)

We are experiencing a fairly consistent issue with random movements whilst waiting at an auto-waypoint.

Hexacopter - Arducopter V3.6.8 - Cube Black

I should point out that in LOITER the aircraft will sit still and not randomly move.

Image showing a waypoint in auto mission - Aircraft should be stationary.
non%20hover

Full mission - Waypoint 1 is worst but all show some oscilation:

In an auto mission consisting of

Take off
Waypoint 1 (delay 10 seconds)
Waypoint 2 (delay 10 seconds)
etc
Land

At some of the way-points (number 1 seems worst) the aircraft does not sit still for 10 seconds its heading appears to randomly oscilate causing a "toilet bowl " type motion. It looks like an oscillation caused by a controller over-shoot/undershoot issue. Once the 10 seconds is over and a new waypoint target is assigned the aircraft stops misbehaving and flies straight and perfectly to the next waypoint where the oscillation some times starts again.

If we change the mission as below, the issue goes away:
Take off
Waypoint 1
Command heading (wait 10 seconds)
Waypoint 2
Command heading (wait 10 seconds)
etc
Land

I am sure this never used to be an issue in older versions of Arducopter so I wonder if there is a bug or I am missing something else?

Has anyone seen anything like this before? Can anyone replicate it?

Any ideas of how to fix it?