Cream together butter and sugar. Add flour and mix well. Stir in nuts and vanilla. Add 1 to 2 Tbsp. cold water if mixture is too dry.Shape into small ovals, as the original recipe said "...about the size of a bird's egg." Put on ungreased baking sheet so that cocoons don't touch each other. Bake at 325 for 20 to 25 minutes or til lightly browned. Roll cocoons while hot in additional powdered sugar. Place on rack to cool. Makes 3 to 3 1/2 dozen.