The fruit bodies of Mycena inclinata grow in dense groups or clusters on decaying hardwood logs and stumps ( especially oak and chestnut ) during the spring and autumn . The fungus forms a white , woolly mycelium on the surface of decomposing oak leaves . Occasionally , it can be found growing on a living tree . In eastern North America , it is abundant in the area bounded by Nova Scotia , Ontario , Manitoba , Missouri , North Carolina , and New York . It has been found in Oregon , but the species appears to be generally rare along the Pacific Coast . The range of the fungus also includes Europe , the Canary Islands , North Africa , East Siberia , Japan , Malesia , Turkey , and New Zealand .